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Immediate Annuity Rates – The Highs and the Lows

An annuity rate is one of the factors that should be considered before buying an annuity contract. Immediate annuity quotes do not stick to one figure of rates. They go high and they go low.

Advertising annuity products always include the rates of their annuities. You might be tired of seeing and hearing advertisements that say they got the highest annuity rates in the market. Well, that is how it really is. It works that way. The higher the rates of annuities a company offer, the more probabilities of a great number of buyers to come.

Annuity calculators are very useful in calculating the rates of your annuity. This is very convenient when you are comparing annuity rates because you can have a better outlook on the better investment options. There are particulars that you can use when calculating the rate of immediate annuity quotes. You have to look at the investment amount and the guaranteed income you will be receiving.

Still, the high rates are not that significant if you end up buying an annuity that is not really for you. To enjoy the high rates privileges, you must also keep in mind to pick what is the best annuity for your life. An 8% rate is very enticing. It really sounds great. However, if it is a rate offered by a single life annuity and you are not single at all or have beneficiaries, it will eventually stop the moment you pass away.

Let me give you a picture on how it will work. Let us say that you bought an immediate annuity, specifically a life annuity. If you have a long life expectancy and you have purchased an immediate annuity, a 5% rate of return is not bad at all. Really, it isn’t. If it is more than that, let us say it reach over 6% or 7%, then you are one lucky annuitant. However, the rate of return for an annuitant that has a short life expectancy could not be so great at all. If you die after 5 or 6 years after your annuity purchase, you will have a negative rate of return. That is really tragic isn’t it? You do not want this to happen to you. That is why you have to choose very prudently what annuity to buy. Consider every possibility and think more openly before you leap into action.

Now, finding an insurance company that gives an annuity quote with a high rate of return is not that difficult. They advertise it themselves. When is the best time to buy an annuity? Well, the answer is obvious. It is best to buy an annuity when it offers a high rate. Rates may go high and low over time depending on many factors. You can also be deceived by the number of rates presented to you if you do not have at least a small knowledge on how it works.

You must at least know that there are different types of rate annuity companies present. There is the current rate, the initial rate, and the renewal rate. The current rate, as the name implies, is the rate that is currently available at that moment for you. The company will decide how long this rate will last. The initial rate is the rate, sometimes referred to as bonus rate, is the rate first allotted to your annuity contract for the first few years. This rate is generally higher that the rates to follow. Lastly, the renewal rate is the rate offered by the company when the rate coverage of the contract ends. The annuitant could choose another rate which the company will provide. These rates are not applicable in every single immediate annuity though. It is still up to you if you will choose to be on fixed annuity or variable annuity.