One of the biggest charms of investing in annuities is the thought of ‘annuity payments’, which come back to you after some time! Annuity payments are of several types of depending on the nature of the annuity, in which you have invested. Regarding annuity payments, the first thing to remember and understand is that one should always avoid cashing his annuity value in mid term, unless the annuitant is under financial stress. Because this involves fines and losses and hence one stands to loose some money.

The payments from annuities are generally fixed and can be found to be on yearly, half yearly, quarterly, or monthly basis. Generally speaking, the more is the frequency of payments, the lesser the benefits. Based on the frequency of return payments, they can be classified into “deferred annuities” and “immediate annuities”. In immediate annuities, the payments are made at much close intervals, whereas in deferred annuities payments are received in longer intervals. If the deferred annuity is a ‘fixed deferred’ one, a guaranteed rate of return is given after the regular intervals. And if it is a ‘variable deferred annuity’, the payments depend on the performance of the linked equity or the industry.

Another classification based on annuity payments is “ordinary annuities” and “annuities due”. Ordinary annuities require payments at the fixed intervals until the maturity period of the investment. But if the payments are made at the start of each such period, which is similar to an advance rent, they are called “annuity due”. There are other classifications based on annuities that are paid after the death of the annuitant.