• An annuity in insurance is a long-term investment contract between a person and an insurance company in which the person makes a series of payments or a single payment in exchange for regular payments or income, either now or in the future.
• When a person is either facing unemployment or has retired, annuities serve to provide a consistent stream of income. Individual demands can be catered to while creating annuities.
Two main categories can be used to categories annuities:
The time between the accumulation phase and the disbursal phase in an instant annuity is remarkably short. The accumulation phase of an annuity policy is the time when the policyholder is paying premiums. The annuity payments are given to the policyholder during the disbursal phase. According to the terms and circumstances of the annuity policy, payouts are handed out immediately in the case of an immediate annuity.
An immediate annuity is the complete opposite of a deferred annuity. In a deferred annuity, there is a protracted period of time between the accumulation phase and the point at which the policyholder receives annuitized payments. Payouts in a deferred annuity scheme begin at a future date rather than now because of a lengthier accumulation phase.
