Using Annuity Calculator

An annuity basically consists of a fixed payment that you either receive as a lump sum by a financial institution or as a borrower. This is different from a policy, as an annuity normally is a type of investment. Annuities normally are paid out at the date of termination of an investment, whether it be a life insurance or other type of insurance policy. An annuity payment is normally made on the date that is specified in your contract. While an annuity payment is normally made on the date that is stated in your contract, it may be paid out over a longer period of time if the investment itself pays out at a rate higher than the interest rate on the loan or security that the annuity was based on.


There are many different types of annuities, but the most well known are those that pay out a set amount each month for a specified number of years. They can be structured to pay out during your retirement, after retirement, or at any other time specified in your contract. One of the most popular types is the indexed annuity. With this type of annuity you can actually guarantee that payments will be made even when you are not in the workforce and thus have no dependents to pay. However, this type of annuity usually requires regular monthly payments. These payments are usually slightly less than what would be expected if the person still worked full-time.

In addition to lump sum payments, you can also choose to have your annuity payments go straight to your beneficiaries. With a self-settled annuity this option is available. You can input the amount that will be paid out each month, and in turn the amount that will be deducted from your annuity. After deducting the amount that is initially paid out, the remaining amount will be invested and paid out according to a pre-determined schedule. A guaranteed annuity offers similar options; however, the annuitant must agree to pay the entire balance of the annuity on or before the maturity date. Many people choose this option because they do not wish to have to start paying into a new account.

Using an annuity calculator can be very helpful. This is because it can take all of the necessary information about the type of annuity you are working with and plug it into a program that computes your payments based on your present value. Using this type of calculator you can determine what your payments would be on a yearly basis, monthly basis, or even annually as well as over the lifetime of the annuity. In addition, you can calculate the amount of interest that will accrue on the investment. Annuity calculators will also be able to take your investment parameters into account, which will allow you to determine whether or not the investment is even worth pursuing.

One important thing to keep in mind when using an annuity calculator is that the results are only as accurate as the information that you input. If you enter in the wrong amount for the present value, the outcome will be wrong. In order to get accurate results, you should consult an experienced annuities calculator as they are designed to gather the right information needed to successfully compute the best possible monthly interest rate.

Some people mistakenly believe that when they purchase an annuity they are purchasing more money than they will actually receive. This is not true. An annuity will simply pay a pre-determined amount every month, regardless of what the value of the investment is at any given time. With all that being said, if you purchase an annuity that is worth less than the amount you are paying in each month, you will end up paying out more money in the long run. Therefore, if you purchase an annuity that is worth more than what you currently owe on it each month you will end up with a higher payment each month. The best part about these accounts is that there is no minimum required balance, so you can withdraw money and not have to worry about losing your initial investment.