Annuity Payments and the Term of the Annuity

The amount of money an individual receives from an annuity depends on the amount invested at the time of purchase. The current value of an annuity, which can be seen as the amount of money that will be received, can also differ from time to time depending on the performance of the market. There are different types of annuities available in the market and it is important for you to understand the terms and conditions associated with them before purchasing them. When comparing the terms and conditions of various annuities, it is essential to compare the investment return of each type of annuity.


The present value of an annuity means the money expected to be received after a specific period of time. An annuity receives discounted returns according to the annuity discount rate. Thus, the greater the discount rate, the lesser is the present value of the annuity. Various other terms like the initial premium annuity guarantee or the guaranteed annuity guarantee are commonly used to explain the concept behind this calculation.

There are two types of annuities available in the market; the indexed annuity guaranteed. In the first one, the monthly payments that are received are equal to the difference between the initial deposit and the market value at the time of purchase. This type of annuity guarantees a fixed income over a specified period of time. On the other hand, in the second type of annuity, payments received are directly proportional to the increase in the market value. As the name clearly indicates, this type of annuity offers you a guaranteed fixed income over a specified period of time.

While choosing an annuity, you should consider whether it is an appropriate option for you or not. If you are getting good returns on your investments but if you want to lock in these returns for as long as possible, then a fixed annuity option may be a better option for you. If you are planning for a comfortable retirement, then you can opt for a percentage or a fixed payment plan with an additional factor of guaranteed payout. In addition, the type of annuity you choose will depend upon your personal situation and your goals for the future.

The amount of money you receive in your annuity depends on many factors including the maturity of the policy, your age, your mortality and the interest rates. It all depends on your condition and your personal situation. Your condition determines the payments you receive. For example, if you are young and you are considered to be in excellent health, you receive high monthly payments. Likewise, if you are aged and have had a stroke or have become disabled, you receive low monthly payments.

However, this option of receiving higher payments over a longer period of time depends on your current condition. If you are in excellent health, you can expect your payments to increase every year by approximately 0.35 percent p 1 and this also takes into account inflation. On the other hand, if you are not in good health and your present value in your annuity is decreasing, you are eligible for lower payments that will reduce the amount of money you pay to your provider. This option of paying more than the present value is usually good when you need extra cash in a short period of time as it gives you time to use the amount you will receive as you need it.