Life Insurance And Annuity

Saturday, March 14, 2009

Life Insurance And Annuity

ANNUITY or the premiums to be paid, is the next big thing while taking a insurance policy. Annuity is as serious subject as is the life insurance policy. It’s just like – paying for pizza is as important as to choose which one to buy, but here the payer is the life insurance company and not you.

Annuity, holds a lot of weight, whether it is a child policy, an accidental insurance or a retirement pension plan, annuity is the most important factor for the insured. Let us first understand what annuity is. Annuity is the stream of payments made by the insurance to the insurer. In other words, it’s a legal contract between the insurer and the insured person, to be paid the stipulated amount of money for a stipulated time. The person receiving the money is known as "annuitant".

Basically, there are four types of annuity: Life annuity wherein you receive annuities for as long as you live; Life Annuity with Return of Purchase Price wherein you receive annuities for as long as you live and your nominee receives the purchase price of the policy after demise; Life Annuities For guaranteed TIME where you receive annuities for a minimum term i.e. 5, 10 or 15 years (if death occurs before the pre decided term, annuity is paid till the end of the term); Joint or Life Survivor Annuity where both you and your spouse receive annuities for life and lastly Joint Life Survivor Annuity with return of the purchase price wherein both you and your spouse receive the annuity for life and the purchase price is also returned.

Life Insurance company – be it a government insurance company like LIC or a private company like Aegon Religare, is the one who is responsible in case of defaulting the annuity. You as a consumer have every right to go the Consumer Court to get your right. After all, it’s the hard money you earned in so many years, have been put to buy a insurance policy. You have every right to safeguard your rights – either by going to a court or by directly calling upon the said insurance company.

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