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Immediate Fixed Annuity – The Basics

An immediate annuity is a popular investment tool that allows you to turn the money you saved for retirement into retirement income through a secure way.

You pay the premium of your annuity contract to the insurance company. In return, they will provide you with a regular income for as long as you live or for a certain number of years, depending on the payout option you indicated in your annuity contract. You can choose to receive payments every month, every quarter, or every year. The immediate annuity, which is also referred to as the classic annuity, stretches the purchasing power or the value of the money that you had saved.

In insurance policies, underwriting questions are usually used by insurance companies in estimating the remaining number of years that the client still has to live. The client’s life expectancy will then be used to settle the amount of premium he/she has to pay for his/her insurance policy. The process is not the same with immediate annuities. In purchasing immediate annuities, questions about your personal health, medical history, and lifestyle, are not included. Thus, you have better odds in living longer than your life expectancy (that the insurance company estimated).

There are two basic types of immediate annuities – the variable and the fixed. Variable immediate annuities allow you to invest your money in the stock market. On the other hand, fixed immediate annuities allow you to guarantee a regular and stable source of income that can last for as long as you live no matter what happens to the economy or to the stock market. The latter type is the focus of this article.

The immediate fixed annuity may be a good option for conservative investors who do not want to risk their money in the stock market. If you cannot afford to lose your hard-earned money and if you are preparing for your retirement, this annuity could be one of the best annuity available for you.

The following are the basic features of an Immediate Fixed Annuity:

1. In non-qualified immediate fixed annuities, a portion of the monthly income is not subjected to taxation. On the other hand, income from qualified immediate annuities is subjected to taxation.

2. Unlike in other annuities in which you can give annual contributions to the insurance company until you have built up the complete cost of your contract, the premium in an immediate fixed annuity can be paid in one lump sum only.

3. It provides you with a definite regular income.

4. A long contract term will result to a lower annuity income. This is because the premium has to be stretched for several years. For example, if you want to receive income for twenty years, the income payout will be half the income you can receive if you choose to receive income for ten years only.

5. Income payout is proportional to your issuance age. Income payout is based on your life expectancy. If you are still young, (say, 40) it is assumed that you might still live for forty more years. Thus, you will receive a low-income payout because the insurance companies expect that they will give you income for forty more years. On the other hand, if you are already 60 years old, you will receive a higher income payout because your life expectancy is shorter. Note that in immediate annuities, annuity applicants should not be older than 90.

6. You can start withdrawing income from your account thirty days or a year after you have bought your annuity.

7. You can choose to receive payments for five years, ten years, fifteen years, twenty years, twenty-five years, thirty years, and for as long as you live.

Immediate Annuity Taxation – It’s All About Tax

Paying tax can be a burden to most people and investors. They think that instead of saving something for their own selves and businesses, some of their money are eaten up by taxes. Some of the people do not think highly of annuities too because they think that the principal they pay will not be fully returned to them in time. Well, the good news is, these down sides have silver lining. You can have a break paying tax in immediate annuities. Your money can be stacked in your account as your investment and for a time invisible for taxes. It will only be taxable when the withdrawal times occur. And even so, not all of it is taxable.

Let us break down the source of funds of immediate annuity into two – the qualified immediate annuity and the non-qualified immediate annuity. Qualified refers to the premium amount that are still qualified for the IRS exemption from income taxes. Non-qualified, on the other hand, is the one that have been purchased with the taxes being paid already. A part of the income is excluded from tax.

When you purchase a non-qualified immediate annuity, the amount paid to you is composed of two divisions. These are the principal and the interest. The principal is the one excluded from tax because it is a return of your initial investment. The interest is the one that taxed as an income.

Although annuities like immediate annuities present a tax break in your income, you should also be aware of some tax issues before buying immediate annuity quotes. Annuities start paying an annuitant after his or her retirement. If you happen to withdraw before the age of 59 1/2, you will receive a 10% penalty from the Internal Revenue Services (IRS). This penalty will be taken from the gain of the annuitant’s contract. It is a waste of money. Instead of avoiding tax, you end up paying more for it.

Also, if you get your income from a tax-qualified retirement plans like IRA and 401 (k), the benefits of being tax-deferred will not be enjoyed by you fully. You will not be gaining additional tax benefits aside from the benefits you are receiving from those plans. Tax-qualified retirement plans like these differ from immediate annuities in many ways like in the case of distributions, deductions, charges and death benefits.

The taxation of immediate annuities and any other annuities depends on the tax status of the money you use to buy an annuity. If it is taxable, then the income you will be receiving will be taxable too. If it is not, then a part of your income may be deferred from taxes.

When you ask an insurance company or any salesperson or agent for immediate annuity quotes, a statement of about the percentage of what is tax-free is indicated. You should really be critical about this since this will be the percentage of tax you will be dealing with if ever you choose to buy that kind of annuity they are advertising. When there is an opportunity to have a break from paying taxes, you might probably grab it immediately. There is nothing wrong with that as long as you take the right measure of precautions first.

Immediate Annuity Solution to Long Term Care

If you are thinking of investing in any kind of annuity for retirement, there is always the need for you to know some details about it.  Immediate annuity is one of the basic kinds of annuities you can invest in.  It can actually be the best solution to the long-term care you have been looking for. You need to know more about this investment option.

Actually, immediate annuity as a unique kind of annuity for retirement gives you the opportunity to turn the money you keep aside for retirement into profitable retirement income.  You simply enter into a contract with an insurance company by giving them a lump sum of your money, which is also known as the Premium.  In return, the company guarantees you a steady flow of income payments for a specified period agreed upon. It can be for your entire life or for several years into your retirement.

Unlike deferred annuity, the immediate annuity starts paying once you have made the initial investment.  It can actually be a solution to long-term care when it’s paying well.   It usually provides a secured way of receiving enough income from   your investment.  The income payments begin to flow in once you purchase the immediate annuity.

It’s good you know that purchasing the immediate annuity requires you present a one-time premium payment.  You can purchase a single immediate annuity premium with the funds you receive from IRAs, 401 (k) plans, Savings accounts, Real Estate and other sources.  You simply invest the money and then sit down to watch it work for you even while you sleep during your retirement period.

Once you have made the initial one-time premium investment, the insurance company guarantees you immediate payment on a monthly, quarterly, or yearly basis.  It all depends on the terms of the contract and how you want the payments to be made. You can choose to receive the payments monthly, quarterly,   or yearly. The choice is yours to make.  The first payment may begin in 30 days or after the first year.

You can use the income payments from immediate annuity for long-term care and other needs you may have. As a unique form of annuity for retirement,   the income payments you receive from immediate annuity can help you a great deal.   You can use the payments to take care of yourself all through the retirement period.  You can also use the payments to supplement your regular pension plans or social security   plans.

Really, immediate annuity can be a solution for long-term care only when you understand how it works.  In the first place, you need to enter into a binding contract with a good insurance company that offers this kind of annuity for retirement.  It’s good you know the details of the annuity including any other charge that may be involved.  If you are confused about the entire process of investing in the annuity, you can seek proper advice. Immediate annuity is never for everyone who is planning to retire. You really need to discover if the option can suit your retirement plan or not.

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.

Immediate Annuity Quotes – An Insider’s Scoop

Annuities are versatile. There are many kinds of annuities available for everyone – immediate annuities, deferred annuities, fixed and variable.  With these many options of annuities, there are even more annuity quotes to choose from.

AnnuityRatesFirst, what is an annuity quote? An annuity quote is where the insurance company gives you a picture of what you will be giving and receiving in a certain annuity type. This may include the benefits, the range of rates expected, the principal amount, the deductible amount, and so on. This is also where the policy limitations are stated.

Immediate annuity quotes slightly vary depending on what type of annuity is going to be purchased. Immediate fixed annuity quotes indicate the interest rate of the payments. The immediate variable annuity quotes, on the other hand, it cannot do so because of the fluctuations that will be going on for the whole duration of the annuity contract.

Some annuity quotes offer higher rates than most of the annuity quotes. Some even have higher benefits than the others. However, do not be very enticed by the high rates and benefits alone although they are one of the factors to consider on choosing an annuity quote. Focus on what you really need. An annuity quote is just right for you for sure. Let us say that you are married and have kids that would go to college soon. You are retiring in just a matter of time so you have decided to buy an annuity. One annuity quote offers a high interest rate. However, no matter how high the rate is, it may not be the best option for you because the stream of payment will terminate on the day your life ends. What you need to look for is an annuity quote that includes a continuous payment that will be passed on your beneficiaries in case if you die unexpectedly and the annuity is not yet finished.

Choosing the best annuity quote is a very subjective matter. What is best for you might not be the best for others. The best annuity quote for a person is an annuity quote that will be more beneficial and advantageous on his or her part. Annuitants greatly differ in their needs and situations. That is why don’t let other people dictate what the best annuity quote is for you. You know what you need better than others think they do. Their service could be of great assistance but the final decision is in your hand.

There are many ways to get an annuity quote. You can get one yourself or someone might get one for you. There are many available annuity quotes online. You just have to log on or click on something and you will have it immediately, faster than you imagined. You could also get an annuity quote from an agent or a broker who happens to be endorsing their products in your home or office. You can also go to insurance companies yourself to look and avail one. Whichever way you choose, always remember to broaden your option. Do not stick to only one. Try to look at different references in order for you to compare each and everything. Trust your instinct and judgment. You know what annuity quote meets your needs and wants.

Immediate Annuity Quotes – Why Making Comparisons Is Necessary

The immediate annuity is a form of investment that can guarantee that the huge amount of money you have today will not suddenly slip off your hands because of impulsive, unstoppable, and wasteful spending. It allows you to stretch your money for many years. In fact, you can stretch it for as long as you live if you want to.

Annuity quotes allow you to find out the estimated amount of income you could get using your savings. Are your savings enough for you to purchase an annuity than can provide you with a regular income for as long as you live? If not, how much more do you need?

To help you decide whether to invest in an immediate annuity or not and, if you have eventually chosen to purchase this type of annuity, decide how much money you are willing to invest, it is important to compare annuity quotes from different sources and different companies.

Annuity quotes are available from different sources online. What is great about online sources is that they provide you an easy and immediate access to annuity quotes for free. Reports on annuity quotes are especially made for each individual interested in purchasing an annuity. Annuity quotes are based on the interested investor’s ZIP Code, the amount of money he/she is planning to invest, his/her objective in purchasing an annuity, and his/her date of birth.

Annuity quotes will provide you with adequate answers for all the questions you have regarding the different types of annuities, the disadvantages and the advantages of each type, and how they work in keeping your investment safe. You will learn what type of annuity is best recommended for people who are in the same situation as you are. Different goals, different priorities, and different financial horizons are also taken into consideration in annuity quotes reports.

Annuity quotes will give you possible answers about how secured an annuity is, how you might pay the premium on your annuity, and how you might withdraw annuity income. Moreover, because you might be purchasing an annuity not just for yourself but also for the people you hold close to your heart, annuity quotes will also let you know about how you can be guaranteed that they receive benefits from your annuity in case you suddenly pass away.

Annuity quotes vary from insurance company to insurance company. This means that some insurance companies might be offering annuity contracts that are more favorable to you than other insurance companies. Annuity quotes inform you about all the things you need to know to become an informed investor. Quotes make sure that when you do purchase a particular annuity contract, you know what you are doing, and that, most probably, you will get what you expect from your purchase.

Usually, an interested investor gets an annuity quote from an insurance agent. The downside of this transaction, however, is that the insurance agent will only give you the annuity quotes of his/her employer company. For the employer company, this is good because their agent is loyal to them. However, for you, the interested annuity investor, this is a disadvantage. Why? Because you will only know about the annuity quotes from a single company when, in fact, there are a lot of other companies out there that offer annuities to the public.

On the other hand, sources and agents online provide you with annuity quotes from different insurance companies. This allows you to compare quotes and to discern which company offers the options you are looking for in an annuity contract. It lets you look for the company that extends the best offerings for you.

How Simple are the Immediate Annuity Payouts

Any retiree will attest to this fact: there is actually no room for making an error when it comes to making investment plans. Remember that this is a class of people who no longer have a regular source of income and whatever amount of money with them is rather limited. Never can such individuals gamble with their cash and take risks in the volatile stock market. Given such scenarios, .a lot can be achieved should the available cash be invested soundly. Research indicates that investors dip into their savings and take out 5 percent or less yearly so that the amount remaining at their disposal can go beyond a span of 30 years. There comes the fixed immediate annuity that guarantees the holder of the plan a lifetime income as enclosed in the contract. Given this option, why keep on scratching your retirement kitty when you can surely purchase an immediate annuity using a small percentage from that account.

Of late, immediate annuities have earned considerable attention. There are provisions for you to buy the annuities in single payments and still get back returns after 30 days. An agreement of this nature is referred to as Single Premium Immediate Annuity. This type involves a single deposit of money from the contract holder. Other forms of immediate annuities have the option for making regular payments at intervals that are specified in the contracts. Whichever the case, you are bound to start receiving returns every month 30  days after you submit the full amount of money to the company processing your plan.

There is confusion in the market about annuities. The public associates ‘annuity’ with ‘variable deferred annuities’. The latter has incorporated active investment with life insurance. Such a product is the outcome of being pushed by agents income is on commission.  Annuities are however an extensive field with a wide range of options. In this society, there are those people who did not plan early enough but are eager to be guaranteed a return. Look no further if you are among them. Stand up, seize this excellent opportunity, and grab an immediate annuity to address your issues. The amount you receive will be based on the following factors.

1.            The amount of premium you deposit in your contract account.

2.            The duration of time over which the plan has been purchased

3.            The guarantees offered by the company.

Note that the rate of return on this annuity can be either fixed or variable.

Below are benefits of immediate annuities:

a.            It is very easy to understand them because they are simple in nature.

b.            They may guarantee you greater returns.

c.             Taxation on your funds is deferred until when payments begin.

d.            It takes a very short time for you to qualify for benefits as soon as you complete payment for the purchase of the contract.

e.            The payouts can be spread over a long period during your lifetime or over a specific period.

f.             Where the terms are fixed, the returns are quite high.

Compare all annuity providers and decide on the best rates of annuity for free! You simply need to enter your zip on the top of this page and then answer just a few basic questions!

Fixed Annuity For The Senior Citizens In USA

When you look around, you will agree that having a secure retirement plan is probably one of the most crucial things in life. It could be for yourself or even your parent. Having made numerous investment decisions in life, you will ultimately come to agree that at old age you need to be relaxing and eating the fruits of your labour and not running about looking for rental houses to live in. You could have already made a decision to buy some good stocks so that at your old age you will just be selling a small part of your investment every other time to keep you going. This is good idea but have you ever considered having a fixed annuity?

A fixed annuity is an arrangement where an individual agrees to give an insurance firm a certain amount of money either in lump sum or premiums which will be paid back to the individual either in instalments or as a lump sum. Many people take up the annuity to cater for their retirement while others the plan to safeguard their children’s education or providing for a surviving spouse if one passed away. One should always get some advice from a person in the know like an accountant because these types of annuities are not suitable for everyone.

The Internal Revenue Code (IRC) is the body that sets out the general rules with regard to annuity administration whereas the individual states set out the actual details to monitor the annuities provided. Therefore, you will find that different states have different rules with regard to administration and features of annuities. The Financial Industry Revenue Authority (FINRA) sets out the rules to be adhered to by the insurance companies that provide annuity services. It is a non governmental body that also licenses the insurance companies.

The USA fixed annuity is designed to cater for the needs of an individual especially the retired ones bearing in mind that the same individual is the one contributing the premiums and thus giving them the at most attentive benefits. You will enjoy the compounded interest for it keeps on accumulating till the annuity matures. What is more is that you are not taxed with anything when making the premium payments to the insurance company. Neither is the interest gained in the process taxed because you are not withdrawing. You will only pay tax on the interest earned when actually receiving your payout. One of the benefits of having an annuity is because of the deferred tax principle.

You will in actual sense be saving. Only that your savings will have more weight as these will earn more interest will be reaching you as an income when you retire. Your principal is also safe as the insurance company invests your premiums in government bonds or other very safe and secure ventures.

In conclusion, it is always good to plan ahead. It’s advisable to take up a fixed annuity at least ten years before your retirement age sets in.

Fixed Annuity As An Investment For Your Future

There are very many investment decisions that you can make at any single moment but you don’t because there are factors that allow or let you make those decisions. The factors are varied and diverse. Some of them include availability of money or lack of it, geographical reasons, risk averseness, returns involved, age, and others that make you or stop you from making certain investment decisions. When you look at some of the lifelong decisions that people make, it would only mean that they are very patient, disciplined or they completely understand what the returns will bring them. When you take for example the fixed annuity as a lifelong commitment that has not a lot of room to manoeuvre other than putting premiums into it you will agree that one needs to be fully prepared before taking this journey.

When looking at fixed annuity as future investment, be it for retirement as many prefer or for your children’s education trust or even taking care of your surviving spouse and children when you passed away, you are assured of getting a sure steady flow of income. Although you won’t be withdrawing unless under special circumstances, the interest earned accumulates and will end up being more than just keeping your money in a bank account. The returns are always higher at the onset of the annuity but as time passes, the insurances company reduces it but never below the minimum rate that has been stipulated in the contract. The rate may go down due to market factors affecting your investment and the market in general.

It serves as a very ideal way of saving for your old age. Quite a number of people can’t resist the urge to always break a fixed deposit account or a general savings account because there are no severe repercussions. In the fixed annuity case, you will have to maintain your cool all throughout because you stand to lose up to 25% of your principal on surrender charges if you withdraw the annuity early in life and another 10% on taxes to the government. If you are under the age of 59.5 years, you are not encouraged to withdraw an annuity because the above charges with be attached to your drawings. However as time goes on you can make some allowable withdrawals.

A fixed annuity plan earns an interest that is compounded. The interest keeps on growing and since you are not withdrawing it the government will not charge any tax on it. This is most ideal because when you are making the premiums you are in a high income bracket and you aren’t charged tax on the premiums but when receiving the payout you are most likely to be in a lower income bracket whereby the tax deferred will be lower.

There is always the comfort and security that comes when you are assured that there is a steady flow of income whether you are young or old.

Fixed Annuity and its 2 Kinds

You can surmount the financial challenges that characterize retirement period if you take time to make the right investment while you’re still in active service. Annuity for retirement is one of the best investments you can make in order to safeguard your future retirement. It’s a good insurance policy that ensures you have some cash to spend when you finally retire from active services.

There are two basic categories of annuity for retirement. They include Fixed and Variable Annuities.  In this write-up, the focus is on fixed annuity. You need to know exactly what it is and how you can benefit a lot from it.

Simply put, Fixed Annuity is a kind of contract you have with a reliable insurance company. It’s all about giving the insurance company your money to manage for you. The company pays you a guaranteed return from the investment as well.

The fixed annuity as a category of annuity for retirement can also be deferred or immediate.  Let’s examine them.

ImmediateAnnuityDeferred fixed annuity

With this kind of annuity, you’ll be receiving a guaranteed amount of interest which will keep on accumulating in the annuity contract you signed with the insurance company. In most cases, the interest rate involved is tax deferred.  You’ll not need to pay any income take until you make your withdrawals.

Oftentimes, deferred   fixed annuity as a kind of annuity for retirement can have very high surrender charges. This is exactly the downside of it.  The surrender charges   may be in place to stop you from making cash withdrawals for   a specified period of 5 to 10 years or even more than that.

Again, a deferred fixed annuity may give you the opportunity of having up to 10% of the contract value every year without any need of paying any kind of surrender charge.

Immediate Fixed annuity

This kind of fixed annuity is a type of   annuity for retirement that allows you to exchange your lump sum of money for a guaranteed stream of income coming from the insurance company you’re dealing with.  There’s no change once the fixed annuity payment begins.  The increase in inflation doesn’t affect   it in any way.

Meanwhile, it’s important you know that once the annuity payments begin to materialize, you no longer have access to the principal cash. You only have   access to the income that accrues from it as may be promised by the insurance company you’re dealing with.

Again, you need to choose terms of payment once you’ve made up your mind to engage in any kind of annuity for retirement. As you’re trading your lump sum for a guaranteed stream of income, you have to do it according to specified payment terms.   It’s always very advisable to compare fixed annuity with other kinds of annuity for retirement   before you agree to invest your money. This gives you enough room to make the right decision. If you’re confused about the kind of annuity to choose, you can engage a good financial adviser to help you out.