What are the different types of annuities plans?

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For those who want a constant stream of income after retirement, annuity plans could provide a solution. It is a contract that provides regular income for a fixed period or over a lifetime. It protects one from outliving their retirement savings. You need to select the type of annuity depending on your needs. For instance, annuities that provide a return of capital benefit at death are also often used for estate planning purposes.

Types of annuity plans

Immediate annuity plans: As the name suggests, payments are scheduled to begin immediately usually after a year or a month of paying the lump sum amount.

Deferred annuity plans: Here you first save for a certain number of years and then annuities begin after the investment period ends. It starts at least after more than one annuity period from the date annuity was purchased.

Life annuity: Under this type of annuity plan, benefits are provided for the lifetime. It is not limited to the tenure of the policy.

Annuity certain: These types of plans offer benefits for the stated period of time. The annuities continue for the stated period after which the policy stops.

Temporary Life Annuity: This type of annuity gives a choice where the benefit is paid until the end of a specified number of years or until the death of the annuitant, whichever occurs first.

Fixed benefit annuities: Here a defined amount of benefit is provided, which does not depend on fluctuation of interest rates.

Variable annuities: Here the benefit amount keeps fluctuating depending on interest rate movement.

Annuity with return of purchase price: This is the most popular annuity option where capital is returned to an annuitant after the completion of the term. In case of death of the annuitant,  the purchase price is offered to the nominee.