There are two main types of immediate annuity. These are the immediate fixed annuity and the immediate variable annuity. Immediate fixed annuity and immediate variable annuity have similarities and differences, their disadvantages and advantages.
These two kinds of immediate annuity have similarities and differences in their immediate annuity quotes. Immediate fixed annuity gives off a flow of income to an annuitant without a change in the rate of return. The rate of return is fixed until the contract terminates. That is why this kind of immediate annuity is not flexible to inflations of stock market and investment performances. On the contrary, immediate variable annuity offers a stream of payment that will be modified throughout the payout period. The rates of these payments vary because of the subaccounts the annuity is tied with. These subaccounts underlying in the annuity invest in some market stock s or bond stocks. Because of this, the rate can go high or low. Nonetheless, if the market performance goes high, the rate of return high likely will increase too.
Immediate variable annuity is a type of annuity that immediately pays out an annuitant with rates flexible to fluctuations. This kind of annuity may guarantee a lifelong income. The lump sum of money paid as the principal amount is placed in a portfolio where distributions of assets from different market stocks can occur.
Immediate variable annuity is most of the time equity-based. Meaning, the rates of income return to be paid out are tied to financial markets. By that situation, either the rate of return could be lower or it could be higher depending on the performance of the market. However, this kind of annuity generally yields higher income because of its tax deferral.
The immediate annuity quotes of this one state a combination of two features that cannot be easily dismissed by prospective buyers. First, a guaranteed lifetime income could be offered depending on the circumstances. Second, income increase may be potential due to market progress. For retirees, these features could be ideal for their situation.
This kind of annuity could be a good option for you if you are a retiree that desires a larger package for your retirement that includes growth for your income. The immediate variable annuity will supplement your needs in a daily basis with a non-guaranteed rate of return. The risk of getting lower rate of return is greater here but the possibility of getting an income growth is also higher.
You should also know that in buying immediate annuity quotes there are charges and fees you have to address eventually. At least learn the basics of some of it, if not all of it, so that you will be properly guided.
Immediate variable annuity has its own strengths and drawbacks just like any other type of annuity. It can really work out for you if this is really what you need and want. However, if this is not really, what you desire, there are more options available for you. You can choose deferred annuities if you want tax deferrals in your income until the withdrawal time. Fixed annuities like immediate fixed annuity can also be a good option for you if you are afraid to lose capital and ensure the fixed rate of income no matter what happens to the market.