ECONOMICS (CBSE/UGC NET)

ECONOMICS

MONEY MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
An amount of money an insurance company pays to a person who has previously deposited money with the company.
A
annuity
B
pension
C
Either A or B
D
None of the above
Explanation: 

Detailed explanation-1: -When an investor buys an annuity, they can pay a lump sum amount or deposit a series of payments to the insurance company. The insurance company, in turn, agrees to pay the buyer-called the annuitant-a series of distributions.

Detailed explanation-2: -An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments.

Detailed explanation-3: -With an immediate annuity plan, an individual can receive guaranteed and instant payouts (for a limited period or lifetime) as soon as they deposit the premium with the insurance company. This type of annuity is ideal for those who are about to retire and need recurring income every month with immediate effect.

Detailed explanation-4: -Immediate annuities: The lifetime guaranteed option. Deferred annuities: The tax-deferred option. Fixed annuities: The lower-risk option. Variable annuities: The potentially highest upside option. 16-Nov-2022

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