Understanding What is a Life Annuity

Before they start looking into a life annuity, many people have to look into what an fixed annuity is in the first place. Basically, it is a contract between a buyer and provider in which the buyer pays a lump sum, sometimes in increments, and the provider then gives them an income for life.You might think this sounds somewhat similar to life insurance, but the two are very different, and you might well need both. The annuity will provide you with funds you’ll need after you retire while life insurance provides the people you leave behind after you die with the money they need.However, it must be noted that the life annuity policy can be used like insurance, with the money still going to your heirs once you die. Of course, not everyone gets these annuities, and we often find that the ones who do so get them because their pension won’t provide them with everything they need.If you decide to get the annuity, there might be some issues with time. You can either choose to pay the required amount all at once just before you retire, or to start earlier and make payments toward the final amount over time. Regardless, the total amount must be in place before you retire.You’ll need to become familiar with the basic types of policies, such as the immediate fixed annuity policy, beginning twelve months after it is actually purchased, or the deferred policy, where the payments to you will take longer to start coming. Do your research to decide the best option for you.You’re going to have to set a lot of money aside to save to retirement, and it’s going to take careful planning. All of this can mean for a lot of stress, but it’s important work to do. You want to make sure you’re provided for once you stop going to work and taking in a regular income.