Home » Know More About Annuities and Annuity Rate

Know More About Annuities and Annuity Rate

You may have heard a term called annuity rate if you have participated in discussions related to finance. This word or term is generally seen in finance stream. The word annuity is referred to any upfront payment you give to an agency generally insurance agency and they give you a fixed payment every month or year. The terms of payment define the annuity rate and the time span over which you get the payment. The time can be years or months. Annuity is generally considered over the value of money with time. More specifically it is the future value of your investment.There are various examples of annuities like monthly payment to insurance agencies, deposits to an existing savings account of a particular bank etc. There are different types of annuities like deferred annuity, immediate annuity, fixed annuity, variable annuity and index annuity all of which have their individual meanings and rates.

Annuity rate is the rate of return on the annuities or the investments you have made. The annuity rate depends on mainly factors like time, the frequency of payments and the total investment made. It is the payment which is made by agencies as fixed in the agreement with the individual annuitants. The rates also vary on life expectancy and gilt yields. Sometimes it depends on the market conditions and the policies set by the then government. The type of annuities also creates a difference in the rate of annuity. When the annuities are in a fixed terms as per the agreement then the rate of return is also fixed and valued and you can almost guarantee an assured return. In case of variable terms the return is not assured as the annuity rate generally depends on the market conditions and subsequently the interest rate which generally depends on the former. You should always consult few people and have a thorough search over the web to know in detail before investment.

Peter Christopher

Back to top