The advantage of Death & Pension annuities

Living of buns and music in your golden years?

Malaysian normally do not think much about annuities, not to mention buying one for their golden years. There are better investment options than investing in an annuity just for the sake of living too long! Some seemingly dull topic here…. but our GUEST BLOGGER and California-based financial advisor, Ms. Sharon Smith think otherwise.

Read her stuff to get a better feel of what’s DEATH & PENSION ANNUITIES:

California-based Guest writer, Sharon Smith

Annuities are agreements between the investor and the insurance companies. The person receiving the annuity payment is known as the annuitant. Apart from the annuitant, a beneficiary is also named as a nominee in the agreement.

A death & pension annuity benefit is different from that of other annuity benefits. It is received by the beneficiary if the owner dies before the full payment of the agreement amount.

Annuities can be fixed as well as deferred. If you go for fixed immediate annuity, you would start receiving returns almost immediately. In case the annuitant dies before the full payment, the beneficiary receives the rest of the amount.

In case of deferred annuity, the payment is not received immediately. The payment is received on a specific date as mentioned earlier in the agreement. In this case, if the owner dies, the benefits received are better. But as the term deferred suggest, the owner might lose some money if the market is not doing well enough.

The pension annuity benefits depend on certain factors as:

  1. The amount in the pension funds
  2. Residence
  3. Age
  4. Health
  5. Selection of continuing pension.

Death & pension annuity benefits are different for men and women. This is because, according to a few researches, women live longer than men.

Some of the pension annuity plans are:

  1. Level pension annuity and escalating pension annuity. Level pension annuity provides the same return through out the life time. Escalating pension annuity provides a lower amount initially which eventually increases every year.
  2. Single life annuity or payment continuing to the partner.

Remember to carefully plan before investing in death & pension annuities. Read all the options minutely. Usually, the brochure provided by the insurance company contains all the details necessary about the various annuities and their benefits. However, if you have any doubt, make sure to consult a financial advisor to clear it. They will be able to guide you towards the proper direction.

Check for all the pros and cons of each of the annuity options that you plan to invest in. This will help you to choose the best that suits your specific requirements.

What do you think? Are they applicable for the general Malaysian public?

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3 comments for “The advantage of Death & Pension annuities

  1. Christina
    March 20, 2011 at 20:18

    Hi I am interested in purchasing an annuity for my parents. Which insurance companies in Malaysia have such products?

    • March 24, 2011 at 19:29

      Do not think any of the Malaysian companies sell annuity. The last time they did have some sort of annuity (linked to EPF) there were hoo-hahs… and finally the government steps in and take it off the shelf. Anyway for those who had bought it before hand still holds on to it as canceling it meaning losing money.

  2. August 18, 2010 at 16:28

    [New Post] The advantage of Death & Pension annuities – via #twitoaster

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