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An Income annuity is a provision that allows you to convert part of retirement funds into lifelong income payments. This is done by using a single lump-sum of cash called ‘premium’ or through flexible premium payments over your working years.
If you are seeking to invest in an income annuity, you need to first figure out how much income you will be receiving and up to what duration. Majority of the annuities payout until the death of the individual and other payouts until the death of the spouse of the beneficiary.
The return you can expect from you income annuity will be based on your life span. If longer the life span, the better returns and longer payments. Payment under income annuity may begin as soon as premium payment is made. Income annuity may be monthly, quarterly, semi-quarterly or annually. Some income annuity also offers death benefits.
The benefits of Income Annuity is mentioned below:
An income annuity can help you to stay away from outliving savings. You can rest assured that no matter how long you live there will be a constant flow of income. The monthly amount is guaranteed and will continue until your entire lifetime.
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An income annuity is not affected or impacted by the performance of the stock Market. No matter what changes occur in the day-to-day running of the market, you can be confident that their annuity income is safe and guaranteed.
Income annuity guarantees future living expenses. If you choose monthly income checks, it will help in staying on budget and ensuring basic needs such as food, housing and health care.
Mentioned below are the funds one can use to purchase income annuity: