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Planning for your retirement is often hazy and confusing, and it is delayed for various reasons. One of the major challenges while planning for retirement is a lack of clarity on the level of liquidity that will be required at the time of retirement. This is because we don't know what the world will look like 10 years from today, leave alone retirement. Nevertheless, it is an investment one should add to their portfolio.
While various options help retain a steady flow of income post-retirement, all these options come with various pros and cons. The path to retirement is not straight, and it takes effort to build a retirement corpus. The twists and turns in life bring about various life changes and events. These events might need special requirements of liquidity or an unforeseen situation. Annuity plans are a savior in the later stages of life, and depending on individual needs, one should evaluate an annuity plan before adding one to his/her portfolio.
Understanding Annuity Plans
An annuity plan is a financial contract between the insurer and the buyer where the buyer of the annuity pays to the insurer and, in return, expects a return on these investments. The returns usually begin, post a tenure, and keep coming in throughout an individual’s life. The insurer who creates these financial products invests the premiums/amount collected from buyers and shares the returns with the buyer after the completion of the tenure agreed upon at the time of purchase. The decision to buy an annuity can be made in any of the investment modes - in a lump sum or a staggered manner over time.
Types of Annuity Plans
Annuity plans come in all shapes and sizes, and the buyer of an annuity has the option to select based on their convenience.
Based on the type of investment chosen, the immediate annuity plans have two options for the buyer. The buyer can decide how they would like to receive the returns.
Benefits of Annuity Plan
Annuity insurance plans are a neat way to plan for retirement. They offer reasonable returns, savings against inflation, and tax benefits. An annuity plan should be a part of your investment portfolio.
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