Annuity

Introduction

For the purpose of meeting financial obligations, an annuity can be defined as a series of space-out and equal payments, paid by a specific party to another party over an extended time period. When a person deals with annuities, an annuity payment is defined as the amount for each monthly installment paid equally. If we consider a 6-month annuity along with monthly installment, then the payments are observed to be equitable, continuing, and regular. 

Meaning of annuity

An annuity can be described in the following way. At the time of signing a contract with a particular insurance company, he or she agrees to make a sequence of payments or a one-time payment or regular payment. This can begin directly or at some later date. Hence, in simple words annuity is a type of contract. In this context, the concept of a simple annuity is important which particularly commences during the start of a particular period as well as their compounding period. While discussing Annuity in the context of business mathematics, the discussion of Annuity certain in regards to general mathematics is important. It refers to the fact that a person’s beneficiaries or heirs will receive constant payments from a particular annuity for a given period of time.

This means that Annuity is the investment in a retirement plan by an insurance company. From another context, the annuity can also be taken in the form of a single payment. It is seen that a guaranteed annuity provides larger returns in comparison to lifetime annuity. This is due to the fact that it has predetermined data of completion. The length of terms generally ranges from 10 – to 20 years. 

Annuity Calculator

On the basis of the conditions prevailing in the market, retirement fund companies or other relevant bodies of the management bring forth the annuities. However, if the volatility within the market is considered then a specialized form of calculator is needed for estimating or calculating annuity. Through using an annuity calculator the user can efficiently compute an estimated amount that they might require as an after retirement annuity. This has even more benefits. Through using an annuity calculator, a particular investor can find out how much investment they should make at the time of accumulation or the accumulation phase for the purpose of obtaining the required accumulated amount at the investment tenure’s end. 

The annuity calculator allows the computation of the income of investment within a specific period. The annuity calculator mostly helps in computing retirement results that involve the Total amount after retirement, future available savings, additional savings, and the number of years that will be generated by the payment at some particular return. 

Annuity plan

Annuity plans can be defined as pension products that are very much different from life insurance policies. If an individual wants to invest their money for the purpose of meeting the long-term needs of retirement then an annuity plan is the most appropriate choice. Within a particular annuity plan, a person either pays a huge sum of money or some regular installments within the given period of time for the purpose of getting regular payments as long as the person lives. The investment companies mostly invest an individual’s money after a specific period of time and then pay them the generated income from that investment after they retire. The benefit of an annuity plan is that it helps in covering the financial risks of an individual thereby allowing him or her to get constant payments in their years of retirement for living a comfortable life.

Conclusion

The main subject on which the article has been written is business mathematics. The topic that has been mostly discussed in this article is annuity. Annuity basically refers to a contract that hands out regular payments to the customer of a particular scheme. Under this main topic, some subtopics such as the annuity calculator and annuity plan have been discussed in this article.