Annuity has always remained a veritable means of generating steady income for retirement. If you succeed in discovering what is annuity and how it works, you’ll always have a good time when you retire. It’s basically a contract you enter with an insurance company whereby you invest you lump sum and expect the company to pay you income returns at regular or deferred intervals.
Annuities have various forms or types. Immediate annuity is one of the types you must know a lot about. It’s a unique investment option that allows you quick access to the investment you make within a short period of time. In several quarters, it’s also known as payout annuity. The regular premiums you invest in the immediate annuity are not paid upon your death. On the other hand, you’ll be receiving regular income payment until death.
In most cases, immediate annuities begin to pay right away once you’ve made the initial purchase payment. People who are ripe for retirement usually go for such investment options. You can easily enjoy steady means of income once you invest into the annuity. If you’re already having a deferred annuity, you can request it to be converted into immediate annuity so that you can reap immediate income returns.
There are benefits that come with immediate annuity. It’s always important you look for benefits each time you take a look at what is annuity. Immediate annuity usually begins to pay right from the time you make the initial investment. This can help you not to outlive your investment when you eventually retire. You simply keep on receiving the income payments right from day 1 to the time you retire.
You also have the option to choose fixed immediate annuity. This option ensures regular income flow at fixed intervals. The income will also keep flowing for several years even before you retire.
Immediate annuity can prevent you a lot from worrying about your investment since you’re sure of receiving regular payments from it. You’ll always have enough cash to settle your expenses. You can easily pay your bills and also enjoy regular shopping since you’ll always have access to cash.
If you also opt for a variable immediate annuity, you’ll still gain. You’ll have to reserve the buying power of the investment ahead of any inflation that may spring up anytime.
Having seen the benefits of immediate annuity, there’s also the need to check out the negative aspects. In the first place, there’s a possibility of paying high charges when you go for immediate annuity. If for instance you go for a fixed immediate annuity, it guarantees you a set of payment for a period of time. Yet, you’re likely to live longer than that specified period. This may force you to lack regular income flow. Inflation may also cause your fixed payment to change over time. This will then reduce the amount of income payment you’ll be receiving.
In any case, there’s always the need to be well informed before getting into any kind of annuity investment. Always engage a good insurance agent to help you out.