Life insurance also includes types of annuity (income) insurance for individuals. For this type of personal insurance, the insurance institution undertakes to pay the insured person regular income on time.
The fund for payments is created from the contributions of policyholders. Rates for rent insurance are significantly higher compared to other types of insurance.
Types of annuity insurance
Rent insurance happens:
- lifelong or temporary
- immediate or deferred , depending on whether regular income is paid immediately after insurance premiums are paid or after a specified period;
- repayable or non-refundable , depending on whether part of the paid contributions is returned to the heirs of the insured after death.
An annuity insurance contract is paid at a time or in installments. Deferred rent with a one-time payment is most common.
Rent insurance sometimes provides for the payment of income to two or more persons (for example, the head of the family and his dependents). Rent may be provided only to the widowed spouse
Annuity insurance may be part of a mixed insurance, for example, with disability insurance, in case of death, etc.
Annuity insurance conditions may include placing payments in shares, rather than cash. The rent and the income brought by the securities in which part of the rent is invested can be paid at the same time.
Rent insurance can be made in individual and group form.
Varieties of annuity insurance are life annuity insurance and pension insurance. The latter type of insurance is most prevalent in group form.
The enterprises, together with the trade unions, organize the provision of pensions for employees, attracting for this the funds of the workers themselves and the enterprises.
In an individual form, contracts are concluded mainly by persons with large lump-sum incomes, for example, movie stars, famous athletes, writers and other persons of free professions.
The term “annuity” is used to indicate the payment system for various types of annuity and pension insurance.
The emergence of annuity at the end of the Middle Ages in Europe is associated with the prohibition of the collection of interest on the given capital. Through an annuity, this percentage was extended: instead of a loan interest on invested capital, it was possible to get a life annuity.
Currently, annuities are distinguished with an investment plan, when insurance income is combined with investing in securities, as a result of which the insured, in addition to a fixed annual income, receives income brought by securities.
The participating annuity assumes that the insured is participating in the profits of the insurance company.
A special annuity is also distinguished when income is paid over a certain period to the insured or his relatives, regardless of whether the insured survives to the end of the term or not.
The annuity can be refundable or non-refundable, depending on whether the refund of contributions is provided in case of death of the insured or not.