Settlement of an annuity can sometimes be puzzling. While we keep on accumulating money over our service period in life, a time comes when we have to decide about settlement or payout. There are various options with respect to your decision of annuity settlement or repayment. Let us briefly touch upon the main options available, to determine what’s best for you.

A common settlement option is annuitization. This is when you choose to get back your money in parts spread out over a long time. This time frame can include the rest of your life. With annuitization, you generally get payments in monthly, semi-annual, annual frequencies. However the principle amount you had invested gets surrendered to the annuity insurance company.

The other option is to take your entire money out in lump sum. Even though this is a good option if you are terminally ill or if you have business interests, it means an end of your financial arrangement with your insurance company. It is very difficult to reinvest that money with good return options at that age. Hence most people choose to get into annuitization.

Annuitization can be of many types, broadly grouped into 3 main heads as discussed briefly below.

Lifetime cover: In this version you get a steady amount of money till your death. However, in the event of your death the payment stops and the balance money is considered to be surrendered with the company. The return value is high in such arrangements

Fixed period payouts: In this scheme, the money is not given for life but a period of years like 5, 10 or 15 years. And in the event of death, a nominee gets back the remaining amount. After the period of time is over, the scheme ends and you are no more covered. The return value of payout is comparatively lesser than the earlier type.

Fixed period and life cover: In this arrangement, the money is returned for a fixed period of time and then beyond that you get a lesser amount steadily for life. The principle amount remains with the insurance company after death, but a steady income is spaced out in a mixed format.

Each option has their pros and cons and has to be judged based on individual needs and financial health. For detailed understanding between the dilemma of payouts and lump sum repayment, you can talk to us, where our team of experts would be happy to share their opinions and guide for your best. Spend some time at the AnnuityLibrary.com. To submit your questions online, Click here or call toll-free at 1-800-998-4056.