What Is a Whole Life Annuity Due?

A whole life annuity due is a financial product sold by insurance companies that requires annuity payments at the beginning of each monthly, quarterly, or annual period, as opposed to at the end of the period. This is a type of annuity that will provide the holder with payments during the distribution period for as long as they live. After the annuitant passes on, the insuran💃ce company retains any funds remaining.

Annuities are usually purchased by investors who want to secure some type of income stream during 澳洲幸运5官方开奖结果体彩网:retirement. The 澳洲幸运5官方开奖结果体彩网:accumulation phase occurs as payments are being m💟ade by the buyer of the contract to the insurance company; the liquidation phase occurs when the insurance company makes payments to the annuitant.

Understanding Whole Life Annuity Due

澳洲幸运5官方开奖结果体彩网:Annuities are financial products that are often purchased as part of a retirement plan to ensure income during the retirement years. Investors make payments into the annuity, and then, upon 澳洲幸运5官方开奖结果体彩网:annuitization, the annuitant will receive regular payments.

Annuities can be structured to make payments for a fixed length of time, commonly 20 years, or make payments for as long as the annuitant and their spouse is alive. 澳洲幸运5官方开奖结果体彩网:Actuaries work with insurance companies to apply mathematical and statistical models to assess risk when determi🐲ning policies and rates.

An 澳洲幸运5官方开奖结果体彩网:annuity due requires payments made at the beginning, as opposed to the end, of each annuity period. Annuity due payments received by an individual legally represent an asset. Meanwhile, the individual paying the annuity due has a legal debt liability requiring periodic payments🧸.

Periodic or Lump Sums

The major decision for annuity investors is whether to take periodic or lump-sum payments. This is when the time value of money comes into play. This mea♔ns the money in your hands today is worth more﷽ than money sometime later. Or conversely, money received at some future date is worth less than money in your pocket today.

Thus, if you receive a $100,000 lump-sum payout today, you'll want to compare that with receiving a stream of payments over many years. Which is worth more depends on a number of factors such as the implied 澳洲幸运5官方开奖结果体彩网:interest rate or 澳洲幸运5官方开奖结果体彩网:discount rate of the payments, the rღisk and return of investing the lump sum, and your need for immediate⭕ cash.

澳洲幸运5官方开奖结果体彩网:Lump-sum payments open you to risk. If the money is invested aggressively, you could earn outsized returns beyond what the periodic payments could provide, or you could lose it all if the markets or your investments sour. You might also be forced or tempted to spend all of a lump sum, leaving you with nothing. It's the reason many people opt for periodic payments when given th♉e chance. In addition, there are tax consequences tied to each method.