Most people assume that annuities are a type of insurance. That is correct, but it is also possible to find annuity plans that have a much different focus than those with insurance as a focus. Annuity plans allow you to benefit from investment returns while still receiving regular payments, either in one lump sum or monthly installments. Depending on how the plan is structured, the payments may be tax deferred or tax-free.

Most people are familiar with the traditional type of annuity, which usually pays out a predetermined amount each month that is based on the earnings level of the individual at the time of retirement. The amount of money that you receive will be determined by how much the person earned during his or her lifetime and the average rate of return for investments in the plan was used to determine the amount. If the person made investments in a high-yielding fund, they may have received a very high income. In fact, some people who worked hard and made good investments have seen their incomes grow so fast during their lifetimes that they never had to retire!

With an annuity plan, you get to continue to receive a consistent and predictable stream of income, even if you don’t have much left over after paying taxes on your initial investment. However, unlike other types of investments, annuities cannot be sold in the event of death. Instead, the person who originally received the annuity can sell the policy to the plan administrator at any time to receive payment value for the policy.

While the idea of receiving constant annuity income may not be appealing to most people, it can actually provide a great amount of financial security. Since the funds in these plans are set in stone, it is possible for individuals to live comfortably off of the income that they receive through their annuities. In fact, this may even be possible if the person is able to access a pension plan in his or her life.

Another aspect of an annuity that is often overlooked is the fact that there may be a way to stop the annuity from paying out to the beneficiary when you no longer are working. For example, some annuity plans may only pay out to the person who initially took out the plan, which will not necessarily mean that the money is available to the spouse and children should they become financially unable to pay the premiums. Some annuities may also provide an option for the beneficiary to pay the plan’s premiums until the policy has reached the end of its term. If you have ever found that your insurance company stopped paying your premiums, you should take advantage of this option as well.

You may also be able to defer the payment of the entire value of your annuity plans for a certain period of time, such as a decade or two. This is known as tax-deferred annuity plans.