You decide to invest in a fixed annuity because you want a guaranteed stream of income in the future. So, what happens next? Here’s how it works, step by step.
Step 1: Choose Your Investment Period:
First, you’ll need to decide how long you want your annuity to last. This is called the “investment tenure”. It can range from just 1 year to decades! You might want a short term if you need a little extra income for a few years, or a long term if you’re planning for the future.
Step 2: Pay Your Money
Once you’ve chosen the length of your investment period, you’ll need to put money into the annuity. You can either pay a lump sum (say, ₹5 lakh) upfront or break it up into smaller payments over time.
Step 3: Earn Steady Interest
Once your money is in the annuity, the insurance company will guarantee you a fixed rate of interest, which means your money will keep growing at a steady pace.
Step 4: Enjoy Guaranteed Payments
After the investment period is over, the fun begins! You’ll start receiving annuity payments, which is the whole point of the plan. These payments can last for a set period (like 10 or 20 years) or, even better, for your entire lifetime! So, no matter how long you live, you’ll always have that money coming in.
Step 5: Decide What Happens After Maturity
When your annuity “matures” (meaning your plan reaches the end of its investment period), you have a few options:
- You can roll it into another annuity for even more income.
- Or you can convert it into a stream of income for the rest of your life—this is the most popular choice because it guarantees you financial security for years to come.
