An immediate annuity is a contractual agreement between you and an insurance company.
You pay a lump sum of money to the insurance company and they agree to make regular payments to you, starting immediately. As is true when making any type of large investment, you should be aware of both the pros and cons to buying an immediate annuity.
Immediate annuity pros
- Provides you with a guaranteed income stream for life.
- You can opt to have payments continue for a period of time after your death.
- You receive favorable tax treatment on the income you receive.
Immediate annuity payout rates depend upon your age, life expectancy and the specific terms of the annuity you buy. It is always smart to compare immediate annuities from different insurance companies so you can be sure you are getting the best immediate annuity.
Immediate annuity cons
- You give up all control of your principal investment
- Once you buy, you are locked into the terms of the annuity agreement.
- Rising interest rates can mean lost opportunity to earn higher income.
- If you die early, your rate of return on your investment may be lower.
While there are some negative aspects of immediate annuities, you can mitigate these by opting for additional features such as capital return, payment to your surviving spouse or inflation adjustment. However, adding extra features will usually lower the amount of your monthly payments.
Now that you have a better understanding of immediate annuities, why not find out about the top immediate annuity rates being offered by the nation’s leading insurance companies. Satisfy your curiosity by simply clicking on the orange button and getting a quote.You are under no obligation and you can see exactly what is being offered in today’s market. We are here to help.