In Depth Information About Equity Annuity And Deferred Annuity Annuities is a investment products which are use to sell by investing companies, which allows itself to accept the legal funds from an individual and later on, upon annuitization, a section of growing funds pays to the individual or investor as a payment after a certain period of time. The main goal of annuity is to secure a certain steady cash of an individual after their retirements and their payments continuous to them or to their spouse alive. Collectively, the investor invests on annuities namely, equity annuities or indexed annuity and deferred annuity so far. The equity or indexed annuity is a special type of annuity which offers a return on the contributions made by the investor to the financial companies on a specified equity based index. The indexed annuity is very much identical to a fixed annuity though there may be some dissimilarity in case of interest calculation. For example, say, an insurance company offering a 4% annual effective interest rate on a fixed credit of $200,000, then an investor will receive an amount of $8000 annually. However, in case of equity index the interest on the same credit ($200,000) depends strongly on or linked very much to the equity markets. Suppose a company offers 10%cap annually to the credit of $200,000for some point to point period of time, and then it simply means that the company will pay the investor on the interest rate anything between 0% and 8%. That means, if the interest rate downs, the investor will get back a lower amount than the expected amount and similarly if the rate increases the payback amount will also be increased as per the contract signed by the investor and the investing company. Thus, this policy allows an investor a high risk security to the investing funds as there no loss of or from the investing amount. On the other hand the deferred annuity is special class of contract on which the paybacks or the payments, installments interludes until the investor elects to receive payback. This type of annuity may be either variable or fixed. The type of annuity includes a saving phase in which the funds are invested to the account and on the other side income phase in which investing plan can be converted into an annuity and finally paybacks receives. The fixed annuities offers the investors a guaranteed payback as per the contract and contacts life but the variable annuities allows funds to be invested in the subaccounts of the invested company in a tax deferred manner. Although there are many variable annuity contracts offers a minimum payback to the investors at a certain cap though the underlying subaccount investments perform poorly. But there still some critics on the type of annuity, as deferred annuity are sold by financial professionals may be or may not be directly linked with the investing companies, and they receives a commission from the investing companies and the commission hugely depends on the total premium paid by the investors. This percentage varies in between little 1%and as high as 12%and as the commissions are high thus they use to criticize the annuity product.
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