With a Swiss annuity you can decide how long the duration of the contract should be. Either choose a fixed-term annuity to be invested during a limited period of time, or choose a life annuity to receive payments for the rest of your life.
Fixed-term annuities
As the name indicates, these annuities are only paid for a specific number of years (term). The contract should always be written with refund - this allows cancellation of the annuity, and puts you in a win-win situation in the event of death of the insured person.
A fixed-term annuity would be appropriate in the following situations:
- you have accumulated capital that you would like to consume. A fixed-term annuity will provide a series of smaller payments allowing you to average-out of the CHF (or other currency) and to keep low profile
- you need a regular flow of income for a given number of years (e.g. until you receive retirement income)
- you want to make sure that your child or grandchild gets a regular income during the time of his/her studies
- you have to guarantee an income to your ex-spouse for a certain number of years (e.g. until your youngest child comes of age).
Life annuities
Life annuities, contrary to a fixed-term annuity, guarantee you an income for life.
The major difference between fixed-term and life annuities - and one of its major advantages - is that the life annuity will keep paying out even after you have consumed your premium and interest - or, in a different formulation, even if the residual value of your policy is zero.
