The Immediate Annuity has several names- Instant Annuity, Single Premium Immediate Annuity, Single Life Annuity, and Single Payment Annuity, among others. All refer to the same thing- An Immediate Annuity is a contract with an insurance company that immediately converts your savings into an income stream.
In terms of Timing, the payments of income and principal commence immediately, in contrast to Deferred Annuities which build for some time before converting into payments.
Immediate Annuity Benefits:
The Immediate Annuityprotects your retirement with steady, predictable income. You can learn more about the Pros and Cons of Immediate Annuities here. Also, there are a wide array of annuity options and riders that add benefits and duration to an Immediate Annuity income stream.
For example, if you want to remove all the responsibilities and risks associated with managing your money thru retirement, the purchase of an immediate annuity can give you a guaranteed income stream for life, no matter how long you live. Or, if you have assets that make you ineligible for Medicaid, an immediate annuity may allow you to remove the assets from your estate.
How an Immediate Annuity Works:
You can buy an immediate annuity with funds available from a 401k, IRA, savings account, life insurance policy, inheritance, or even the sale of a home or major asset. The insurance company you select promises to give you an income stream you select in exchange for an upfront premium expense. The company assumes all investment risk and calculates the income amount based on your age-weighted life expectancy. You can choose how often you receive a payment from the annuity, such as monthly, quarterly, or yearly. The amount of income you receive is based on the amount of money you initially contribute, plus a number of factors including your age, sex, income option selected, and interest rates at the time of purchase.
Get our report to learn how an immediate annuity can help, if:
- You want certainty that you won’t outlive your income,
- Your retirement expenses are not covered by your monthly pension payment,
- You want to eliminate management of your retirement savings,
- You want to protect assets from high nursing home costs.
To Calculate your Immediate Annuity benefits, this Immediate Annuity Calculator is a great place, however the only accurate method is to obtain a quote from a licensed Annuity Expert. Please Contact Us and let us find the best Immediate Annuity for you.