How Can Annuity Bring Me Steady Income for Life?

The desire to enjoy the fruits of your labour in your golden years is natural.
But what happens when those years come, and you find yourself financially unprepared?

Achieving financial security goes beyond building a successful career or business. A successful retirement plan does not overly depend on the goodwill of your children, family, or friends, even if they are financially stable.

Building financial security now is the best way to ensure that you continue to enjoy a comfortable lifestyle when you retire without becoming a burden. This is where Annuity comes in.

Annuity Guarantees Steady Income for Life

An annuity is a pension plan designed to provide you with a steady, predictable income stream after you stop working.

Think of an annuity as a formal agreement between you and an insurance company. You either invest a lump sum of money upfront, or make smaller payments over time.

In return, the company guarantees they will send you regular payments, either starting immediately or at a future date you choose.

This flexibility allows you to tailor the investment to your financial situation.

Annuity plans function in two distinct phases: the accumulation phase and the payout phase.

The Phases of Annuity

During your pre-retirement (accumulation) phase, the funds you contribute to your annuity grow within the plan. This growth can potentially help you reach your retirement income goals.

Once you reach retirement age (or a date you selected), the annuity kicks in. And you will start receiving regular payments. The amount you will receive depends on how early you start saving. Therefore, early saving is highly recommended.

Insurance companies understand that financial goals, lifestyle, and risk tolerance vary, so they offer a range of annuity plans to suit individual needs.

Find the Perfect Fit, Explore a Variety of Options.

In choosing an annuity, one size does not fit all. There are five different options to choose from:
Life Annuity: With a Life Annuity, your insurance company makes regular payments to you for as long as you live. Choose the payout frequency that best suits your needs – monthly, quarterly, or annually.

Joint Life Annuity: This policy guarantees income for you and your spouse. You will both receive regular payments for as long as either of you is alive. This ensures financial security even after one spouse passes away.

Life Annuity guaranteed for 5/10/15 years: This plan offers a guaranteed income stream for a fixed period of your choosing (5, 10, or 15 years). If you pass away within that period, your nominee will continue receiving payments until the end of the guaranteed term.

Immediate Annuity with Regular Payout: You will start receiving income payments right after you invest, and your insurer will continue at your chosen schedule.

Why Annuity should be your Preferred Pension Plan

Peace of Mind: Unlike market-linked investments, annuities offer low risk and guaranteed returns. Your insurer manages the investment, so you can invest with confidence.

The exact amount you will receive is fixed at the time of purchase (be sure to review the terms and conditions).

Financial Independence for Life: Unlike a lump sum retirement payout that can be depleted quickly, annuities provide a steady, guaranteed income stream throughout your retirement.

This ensures you can maintain your desired lifestyle without financial worries.

Flexibility You Deserve: Annuity plans offer control over your income. You can choose how often you receive payment. Additionally, some plans offer flexible premium payment options (monthly, half-yearly, yearly) during the build-up phase, allowing you to tailor the plan to your budget.

Is My Money Safe with Annuity?
Your investments are secure with an annuity. Regulatory bodies like the Assets Management Corporation of Nigeria (AMCON) and the National Pension Commission (PenCom) oversee annuity providers, ensuring your financial well-being.

How to Earn More

The earlier you begin investing and the more you contribute, the greater your retirement payout will accrue to.

Despite the glaring advantages of taking out an annuity, some myths cast a shadow on its reliability.

Common Misconceptions about Annuities Cleared Up

1. The payout does not stop coming when a person dies. Many annuities offer survivor benefits that continue payments to a designated beneficiary after a death.
2. Inflation does not outweigh returns. Inflation protections are introduced to help your income keep pace with rising costs.
3. The insurance company does not make all the money. Annuity contracts are designed to benefit both you and the insurer. You receive guaranteed income, while the insurer manages the investment risk associated with your longevity.
   

However, do your research before choosing an insurance company. Look for a reputable provider with a strong track record, like Coronation Insurance.

Coronation offers a variety of annuity plans with flexible payout options. Everyone deserves a secure retirement. Start investing today, no matter the amount.

If you enjoyed reading this blog, you may also be interested in Blueprint for Your Best Life: Key Financial Planning Tips to Preserve Your Money