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Annuity policy is different. And life Insurance is different. A guidelines is a process of action selected from different choices with given conditions which leads to the decisions made for present and future. Annuity policies are usually sold by Life Insurance companies.. It is a laid down conditions understanding between the insurance business house and the person (policy holder).

Annuity provides a steady income. It pays for a fixed period. It pays till death also. Annuity in general is a policy which guarantee the holder certain stipulated settlements against payment of premiums, as agreed. The policy has options. It can be a joint policy. It can be alonwith spouse. The premium disbursement to these policies ceases on the death of the primary owner of the policy but the income guarantee continues and the recipient of the joint holder receives until he/she is alive.

Annuity has a death benefit. It can be more than the money paid. It is also equal to the money paid. Annuity is purchased by only premium payment, or through payment for a period which may last up to 20-25 years, depending on the requirements of the scheme and the policy holder's choice. Annuities are not, necessarily, paid only on retirement or death but also at a pre defined time or age.Annuiyty is not only paid on death. Not in retirement also. It is paid at a particular time or age. Annuity can be {decided in two ways; the fixed annuity and the changeable annuity.

In a fixed type of annuity the policy guarantees a fixed amount of return.. This is because the insurers decide the rate of fixed interest to be paid during the term of the policy. Fixed type of annuity gives a small return may be at par with the bank interest.. But with this growth the benefit to the policy holder may not handle with the rate of inflation a decade after his policy. The benefit of this policy is it provides a steady income to the policy holder over a stipulated period of time or until death.. However this policy is protected and secured.

Variable annuity has risk. It depends on stock market. This is a brave alternative for interested individuals, but is not preferred by many because of the risk factor. Variable annuity has portfolio. It invests in stock funds. For example, equity fund, debt fund balanced finance or a cash fund. One has to invest in these funds on the prevailing rate of the units.. These policies pay the total stock value on the day's NAV. NAV means net asset value.. This is the actual achievement indicator of a fund. A fund's NAV is calculated by taking into account the total assets minus all expenses and then divided by the number of its total outstanding units.

Equity schemes primarily invest in equity shares of companies. The equity scheme provides returns by way of capital appreciation.. But these plans risk are higher and thus the returns may vary.

Debt schemes invest in income-bearing bonds, debentures, government securities, commercial paper, etc. These schemes are much less unstable than equity schemes.

Balanced schemes invest both in equity market and debt market to balance the portfolio. |Blanced scheme invest in debt market. It also invest in equity market}.

In a cash fund the money is not invested in the equity or debt market which assures the policy holder the guarantee of their wealth, which is free from any risk. The investment here may not grow but will never come down..