Immediate Annuity

An immediate annuity refers to an investment which is made for retirement and the premium is paid either in one lump sum or by installments spreading over a few years. The policyholder will receive a specific amount of funds each year. The payment can either be yearly or monthly depending on the decision of the policyholder. The duration of the immediate annuity can be either for life or for a certain amount of years.

The immediate annuity is also called life annuity but it provides no benefit to the buyer of the policy. This policy is best for people who are about to retire or who have already retired. The premium of this policy is normally paid in lump sum at the time of the purchase. The income payment of the immediate policy will start within 12 months after the buyer has bought the policy. It is designed in such a way that the buyer will get a certain amount of money on a monthly or an annual basis. The rate of the annuity can be either variable or fixed.

However the fixed rate policy gives the buyer a fixed amount while in case of the variable rate the amount can fluctuate depending on the performance of the insurance investments.  

The buyer can purchase this policy under immediate payment only. In this case the buyer the buyer will pay the whole amount to the insurance company. This is a good option for people who will retire and who want payments immediately which are usually 30 days after the payment is made. We should remember that living in this uncertain world is not so easy and it is necessary that you have money saved for a rainy day. also there is no doubt about it that the retires can have a better life if they have a constant stream of income coming from immediate annuities. The best thing about immediate annuity is that it pays the fixed income on a monthly basis for about 20 to 30 years. You will not get such continuous flow of income from other streams.   

The immediate annuity also gives you a guaranteed return which is a better option than investing in stock. Though the amount might be lower than what you earn at the stock exchange but you are ensured of a steady amount flowing in your bank account. Also you can get a tax free return on your immediate annuity.