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Immediate Annuity and How It Works

There are two main types of annuity– the deferred annuity and the immediate annuity. Both of these annuities have different features. The immediate annuity and some of the features included in immediate annuity quotes are the ones emphasized here in this article.

Immediate annuity is an annuity that allows the clients to purchase a stream of income in a specified period of time.  As its name suggest, immediate annuity delivers an immediate payment not long after the signing of contract. This flow of payment is what we call annuitization. Annuitizations differ depending on the type of investment you choose for your annuity. You could choose between fixed annuity and variable annuity for this matter. Under that, annuitizations also vary based on what specific type of annuity you will choose. It could either be life annuity or term certain annuity. Sometimes, the age and the gender of prospective buyers play a great role in the annuitization. Some annuities take the life expectancy of a buyer as a factor in annuitization.

How immediate annuity does actually works? If you choose to buy immediate annuity of any kind you desire, you have to pay a certain amount of money as a single purchase payment. After that, you will receive income payments that usually start after 30 days of annuity contracts purchase. You also have the liberty to select how you will receive the income payments. You can pick among monthly, trimestral, or yearly payment plan. These income payments last for a period of time that is included in the contract.

An immediate annuity gives you an option to choose between immediate fixed annuity and immediate variable annuity. What makes the two different from each other? Immediate fixed annuity is an immediate annuity that offers a flow of income to the annuitant that does not change. That is why it is fixed. Investors greatly need to consider their financial conditions before buying this kind of annuity because this does not offer a flexibility regarding the inflation of income. However, it offers a pretty good stability of payments that cannot be affected by the rise and fall of stock market and investment performances.

Immediate variable annuity, on the other hand, is an annuity type that offers a stream of income that will definitely change and modify during the period of payment. The payments are subject to go up or down. This annuity may also allow you to receive more income than the immediate fixed annuity can offer. However, since it is not fixed you are also prone to market deflations.

Choosing a term for your immediate annuity also requires a lot of decision making. A term will determine how long your payments will last. If you choose a term certain annuity, expect to have an income flowing through your palms in a certain period of time only. It depends on how many years you will decide on receiving payments. It would have to end at a specific time eventually. If you happen to choose a life annuity, there is a guarantee that you will be paid for as long as you live. If an annuity holder dies and the contract states that the payments are not yet fully paid, the beneficiaries of the annuitant will continue to receive the remainder of the payments. Keep in mind though that this is not applicable to every immediate annuity quotes. So you have to choose carefully before buying one.

Many prospective annuity buyers consider immediate annuities because of its guaranteed lasting and regular payments that could start immediately after their purchase. If you need income in a regular basis, then this may be the right kind of annuity for you. Decide now. Enter your zip here to check and compare immediate annuity quotes immediately and for free.