Page 74 - IC23 life insurance application

ANNUITIES:

Annuities are called the reverse of life insurance, because annuity starts when life

insurance ends. Annuity is a series of payment by the insurer on the expiry of the

period during which the annuitant pays the consideration money.

There are a lot of varieties of annuities, depending upon the method of payment of

consideration money or the method of payment of annuity. However, since in all

cases, the annuitant gains by living longer, there is a self-selection and therefore, no

medical examination is required. However, age is an important factor.

IMMEDIATE ANNUITY:

Here the payment of annuity starts immediately after payment of the purchase price

or the consideration money. Normally this purchase price is paid in lumpsum.

DEFERRED ANNUITY

This annuity is paid after the expiry of the selected period. The purchase price can

be paid in single premium or instalments over a period. The date of payment of

annuity can be prefixed. The period during which no annuity is paid, is called

deferment period.

The mode of payment of annuity can be monthly, quarterly, half-yearly or even

yearly. It is also possible to select whether the annuity should be paid for a definite

period, which is called annuity certain or till life. It is also possible to arrange to

receive the annuity for a certain period and thereafter for life.

Presently a more attractive annuity is also available. Some annuitants feel that if

they die early, the insurance company makes too much profit, because it does not

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