Understanding different types of annuities is important. Immediate annuities are policies that are purchased form insurance companies. Often they are refereed to as Single Premium Annuities or Single premium Immediate Annuities. Immediate annuities are commonly used as retirement investments and purchased with a single payment. An immediate annuity provides regular income for the time period determined by the annuity owner. You can choose payments over your lifetime or whathever time frame suits your needs. You can also designate payment to be made to your spouse or other family members.
The immediate annuity provides regular income that should continue for the rest of one’s life or for a time period that the policyholder selects. The minimum investment for immediate annuities usually starts at $ 10,000.00 US dollars.
Interest rates and monthly payments will remain constant with immediate annuities. The insurance company that issues the policy makes those guarantees. Obviously the amount of the payments made depends on your initial investment, as well as the current rate of interest when you purchased the policy.
Something else to consider is where you buy your immediate annuity policy. Private purchases have a tax advantage in that a large portion of the monthly payout will be tax-free. Policies purchased within a company pension pan are fully taxed. Immediate annuities offer a wise investment with peace of mind for your future. Not all insurance companies offer immediate annuities. As always check with your investment adviser or make sure you shop carefully before making a purchase