Immediate annuity is an annuity that has little or no accumulation phase. You purchase it with one payment and may begin receiving series of payments whether right away or deferred it until specified time. Immediate annuity could help secure your financial future by ensuring a series of income payments.
Person with these conditions might find immediate annuities suitable:
* Person who want a retirement income and might want to consolidate some of their accounts and receive multiple income payments.
* Person who has winning lottery or inherited a sum of money and wants to receive that money over time.
* Person who have been awarded a sum of money from court settlement and awarded paid over time via an immediate annuity.
The characteristic that distinguish immediate annuity from other annuity type – deferred annuity is you purchase annuity with a lump sum of money (called a premium) at one time and eligible to start receive series of payments based on your annuity payout option.
Unlike deferred annuity which is required relatively longer accumulation period. Immediate annuity has only little or no accumulation period. This annuity type suits for person who has immediate large sum of money to invest and want to receive constant level of income in regular basis.
If you a safety type investor, fixed annuity is the most annuity type to consider. Fixed annuity guarantee minimum annuity payment you will receive each month or each year depends on the payouts option. Yet, it has little or no inflation protection at all, so it may erode your investment.
If you enjoy more rewarding investment gain, variable annuity might be the answer. This is more complex annuity than immediate annuity, so its not for everyone. Variable annuity put your money to invest in more fluctuate market, such as stock market. Contrary to fixed annuity, your annuity payment will vary depends on how investments in the stock market perform. It may increase as well of decrease, that’s why it’s not for everyone, more specifically the elders.
One benefit of annuity over other investments is annuity offer is tax deferral benefit. You only pay taxes on annuity payments that are considered earnings, you are not taxed on the portion that is principal. The principal is the initial deposit made with funds that have already been taxed.
Annuity is an insurance product. Some insurance features to consider is death benefit, this insurance feature promises that if the annuity buyer die, the beneficiary will receive at least the premiums have paid or more in some cases of enhanced death benefit. Sure it will cost extras fees, but worth enough if you want to leave income for your beneficiary.
This article only provides general information about immediate annuity. It is not applicable as recommendation for personal annuities advice. For personal annuity advice contact the insurance company near your state.
Word count: 473