Structures annuity settlement - Annuity is an interest calculation method that is intended to facilitate customers in paying the installment amount for each period.

Definition of Annuity

Annuity is a series of payments of the same amount of money over a certain period of time at a certain interest rate. Annuity methods are usually used in financial theory to refer to each stream ending fixed payments over a certain period of time. This use is most often seen in financial discussions, usually in relation to valuation of the flow of payments, taking into account the time value of money, concepts such as interest rates and future value.

However, based on the definitions given by these experts, it can be concluded that annuities are a series of payments or receipts whose numbers are fixed, and must be paid or must be received at the end of each period with the same period of time for a certain number of years, and in which the repayment of loans and money.

Annuities are classified by the frequency of the date of payment. Payments (deposits) can be made weekly, monthly, quarterly, yearly, or at other intervals.

Types of Annuity

Annuities also have certain types, namely:

1. Fixed / Variable Annuities

Fixed Annuity, which also has a certain interest rate, similar to a Certificate of Deposit (CD) bank. In fixed annuities, insurance companies provide a basic guarantee and a minimum interest rate. In other words, as long as the insurance company is good financially, the money you invest in the annuity will continue to grow and not experience a decline in value.

Variable annuity, that is, if your money can be invested in the investment instrument, the rate of return will be not fixed, especially in mutual funds. The value of your money in a variable annuity and the amount of money to be paid to you will depend on the performance of the investment after deducting the cost of managing the fund.

2. Deferred Annuity / Immediate

Deferred Annuity is having a period in which premiums and investment returns will be accumulated before regular payments are made. This accumulation period can be very long, like deferred annuities for pension funds that last for decades and until employees reach retirement age.

Immediate annuity ie if you start paying income periodically one period after an annuity is purchased. That period will depend on how often the income will be paid. For example, if income is monthly, the first payment is made one month after the annuity is immediately purchased.

3. Fixed Period Annuities, Permanent Amounts / Lifetime

Fixed Period Annuity is if you pay income for a certain period of time, for example ten years. The amount of income paid will not depend on the age or survival of the person who bought the annuity (called anuitan).

Lifetime Annuity which will provide income for the remaining life of anuitan. A variation of the lifetime annuity will continue to provide income until two anuitant couples die. The amount paid also depends on the age of anuitan, the premium paid to the annuity, and the accumulated return on investment.

4. Single Premium / Flexible Premium Annuity

Single Premium Annuity which will be funded by a single payment. The single premium annuity can be deferred or immediate. Most single annuities are funded from retirement savings that are due on DPLK (Financial Institution Pension Fund).

Flexible Premium Annuity is an annuity funded by a series of premium payments. Flexible annuities are also always deferred, which is designed to have a sufficient period of time to accumulate premiums and investment income before money can be paid regularly.

Structures Annuity Settlement
Structures Annuity Settlement