Need for Pension and Annuities

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Need For Pension And Annuities

Now that we have understood the concept of annuity for life insurance and its different types, it is also important to know why it is necessary.

The purpose of annuities is exactly the opposite of life insurance (covers the risk of dying too early), i.e., the risk of living too long (read increasing life expectancy due to advanced medical care facilities). If you live too long then you will be hit by an increase in cost of living and higher medical expenditure.

Therefore, the need for annuities stems from the rise of life expectancy and expenses subsequently.

Retirement benefits like Provident Fund and gratuity are paid in lump sum which are often spent too quickly or not invested wisely with the result that the employee / retiree finds himself without enough regular income support in his post - retirement days. So, pension is an ideal tool of planning for your golden years as the benefit is in the form of regular income at regular intervals

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