For example, a 10 year period certain annuity would make payments for exactly ten years, regardless of whether you die one year or twenty years after the annuity payments begin. There are two basic types of annuity payouts, known as a fixed payout and a variable payout. While a CD or bond pays a stated rate of interest, a stock mutual fund fluctuates in value based on the performance of the underlying assets in the mutual fund portfolio. In similar fashion, a fixed payout from an annuity provides a level payment for a specified period of time, while a variable payout generates payments that fluctuate based on the performance of the underlying assets in the variable annuity portfolio. Bonds are subject to market fluctuations and maybe worth more or less when redeemed.
Bonds are subject to market fluctuations and maybe worth more or less when redeemed.
The problem with other kinds of income-generating investments lies in the fact that people generally don't feel comfortable digging into their principal. How much principal is distributed with each payment is determined primarily by your statistical life expectancy and other factors. The risk of depleting principal is assumed by the company that has issued your annuity, leaving you to worry about more important things such as how to enjoy your retirement. Quotations will vary based on age, sex, and state of residence. At death of Annuitant in a Life Income option, or at the end of a Period Certain, the Annuity income ceases and the Annuity has no value.