What is an Immediate Annuity?
An immediate annuity is an investment policy that is usually purchased from an insurance company. Immediate annuities are commonly used as retirement investments and purchased with a lump sum. The immediate annuity provides regular income that should continue for the rest of one’s life or for a time period that the policyholder selects. The immediate annuity is also sometimes known as a Single Premium Immediate Annuity. The income should begin within one year from the date of purchase. There are a variety of different options available to you when purchasing an immediate annuity. You can decide whether you would like a set period of payments or a lifetime of payments. You can also decide on whether the payments are solely for the person who holds the policy or also for a secondary person, such as a spouse. There are a number of factors to consider when purchasing an immediate annuity investment. The minimum payment required for the investment is usually around 10,000 US dollars (USD).
With an immediate annuity (or income annuity), you generally pay the insurer a single amount in exchange for payments that begin immediately (within 12 months). Payments must be no less frequent than annually. Payments continue for your entire lifetime, or for some other duration offered by the insurer, such as the joint lifetimes of you and another person, or a specified number of years. Depending on the option you choose, there may also be a death benefit, where payments may continue to your beneficiary for some time after you die. Immediate annuities can be either fixed, with generally unchanging payments, or variable, where payment amounts will vary based on the performance of underlying investments.
With an immediate annuity (or income annuity), you generally pay the insurer a single amount in exchange for payments that begin immediately (within 12 months). Payments must be no less frequent than annually. Payments continue for your entire lifetime, or for some other duration offered by the insurer, such as the joint lifetimes of you and another person, or a specified number of years. Depending on the option you choose, there may also be a death benefit, where payments may continue to your beneficiary for some time after you die. Immediate annuities can be either fixed, with generally unchanging payments, or variable, where payment amounts will vary based on the performance of underlying investments. Top What is a deferred annuity? A deferred annuity is a type of personal account intended for long-term savings goals, like retirement. Unlike an immediate annuity, income payments are optional and are deferred until a future time. Deferred annuities have two phases: the savings and in
An immediate annuity is a contract between an individual and an insurance company that allows the individual to convert a lump sum of money into a steady stream of income for a specified period of time. SPONSORED LINKS Why would someone want an immediate annuity? An immediate annuity is a useful option for someone who has money to invest now, but wishes to establish a source of cash income on a monthly basis. For instance, an individual could use $10,000 to create an immediate annuity that can be used to make child support / alimony payments, provide monthly income for a relative or pay for a child’s education expenses. How long can an immediate annuity provide monthly payments? You can set up an immediate annuity to make payments for a specified number of years (i.e. 5 years, 10 years, 25 years), monthly until your death (or have the payments transfer to a beneficiary of your choice upon your death.) SPONSORED LINKS How much can an immediate annuity pay on a monthly basis? The amount
An immediate annuity has no accumulation phase. You make a deposit with the insurance company and immediately begin receiving payments. These annuities are generally suited for senior investors (age 70 plus) who desire to increase their monthly income. You can see how much you get using the immediate annuity calculator.
