immediate annuity

Immediate Annuities are an excellent choice for people who either have or are about to retire. Either way, immediate annuities are for people who need want their payments to start sooner than later.

A deferred annuity requires that you wait a certain number of years before you start receiving payments on your annuity. And usually you are subject to fees and other penalties if you withdraw your money before that time period has expired. But with an immediate annuity, you put down one lump sum and usually your payments start within a calendar year.

This type of annuity is often funded by the rollover of a 401K or the sale of a house. And there are many advantages to buying an Immediate Annuity.

• No responsibility required. With an immediate annuity, one isn't required to manage or invest one's life savings. This allows for a no-worries retirement.
• Higher returns. Often the interest rates used by insurance companies to calculate insurance rates are higher than CD or Treasury rates.
• Stable and reliable lifetime income, which depending on your payment option, sometimes can't be outlived.

Still immediate annuities carry some of the same drawbacks as fixed annuities:

• Even though your money is being put to immediate use, you still have to pay management fees and cost.
• Depending on which payment plan you choose, you could still lose your principal if you die prematurely.
• You still have only limited access to your principal.

 

Compare an Immediate Annuity with a ( LIFE ANNUITY )