What are the different types of annuities?
There are four basic types of annuities to meet your needs: immediate fixed, immediate variable, deferred fixed, and deferred variable annuities. These four types are based on two primary factors: when you want to start receiving payments and how you would like your annuity to grow.
What is annuity PDF?
An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for the premium or premiums you have paid. Annuities are most often bought for future retire- ment income.
What is simple and general annuity?
Simple Annuities Due are annuities where payments are made at the beginning of. each period and the compounding period is EQUAL to the payment period (P/Y = C/Y) General Annuities Due are annuities where payments are made at the beginning of.
What are the 5 types of annuities?
There are five major categories of annuities — fixed annuities, variable annuities, fixed-indexed annuities, immediate annuities and deferred annuities. Which is best for you depends on several variables, including your risk orientation, income goals, and when you want to begin receiving annuity income.
What is a perpetuity an annuity?
A perpetuity is a type of annuity that is set up so that the payments will never end. There is no set maturity date. As long as an investor owns a perpetuity, they will keep receiving payments.
What is annuity certain?
An annuity certain is an investment that provides a series of payments for a set period to a person or the person’s beneficiary or estate. It is an investment in retirement income offered by insurance companies. The annuity may also be taken as a lump sum.
What is a general annuity?
A general annuity is an annuity where the payments do not coincide with the interest periods. You will be able to see that it is very easy to deal with general annuities once an equivalent interest rate is determined with that equivalent rate being compounded as often as the payments are made.
What is annuity with example?
An annuity is a series of payments made at equal intervals. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates.
What is a five year annuity?
A 5 Year Certain And Life Annuity is a type of annuity that will provide payments to you for 5 years, even if you die. If you pass away during the guaranteed period, the rest of the payments will go to your beneficiary.
What are the two most common types of annuities?
The main types are fixed and variable annuities and immediate and deferred annuities.
Types of Annuities Annuity certain is an annuity whose term is fixed when the term starts and ends on definite date. Ex.: Monthly payment on home appliances where payments starts on a specified date and continue regularly until the last payment is made. Contingent Annuity is an annuity whose term depends upon some uncertain events. Ex.:
What is an annuity?
Annuity is a sequence of equal payments made at equal intervals of time usually monthly, quarterly, semi-annually and annually. Some examples of annuities are: Installment payments Rental payments Life insurance premiums Weekly wages Periodic pensions 2.
What is a contingent annuity?
Contingent Annuity is an annuity whose term depends upon some uncertain events. Ex.: Life insurance premiums and pensions 3. Classification of Annuities Ordinary annuity is an annuity whose payments are made at the end of each payment interval Ex.:
What is the present value of an ordinary annuity?
The Present Value of an Ordinary Annuity (cont.) • PMT = annuity payment deposited or received at the end of each period. • i = discount rate (or interest rate) on a per period basis. • n = number of periods for which the annuity will last. Copyright © 2011 Pearson Prentice Hall. All rights reserved. 6-27 28.