Immediate Annuities

With significant advances in health care, people often survive many years beyond retirement with concerns of outliving retirement savings. Asking for an immediate annuity quote is one answer to this problem. Immediate annuities provide a way to ensure an income, in the form of a check, for life—however long it may be. Investing the money saved for retirement in the form of an immediate annuity can provide a self-made pension.

Distribution of Immediate Annuities

The traditional distribution for an immediate annuity is lifetime. An individual pays a sum of money to an insurance company in exchange for guaranteed, lifelong payments. The payments are calibrated to the life expectancy of the annuity holder. Upon the annuity holder’s death, the remaining funds belong to the insurance company.

Before Requesting an Immediate Annuity Quote

There are several considerations before buying an immediate annuity.

Cash control

Once a client pays the first installment, he or she is then locked into the chosen monthly payment plan. If unforeseen circumstances occur that require emergency funds, extracting money from an immediate annuity is not an option. When requesting immediate annuity quotes, remember that an immediate annuity is a one-time purchase which cannot be cashed in.

Heirs

An immediate annuity provides payments for the rest of the annuity holder’s life. The payments stop upon death. There are no residual payments to heirs, even if the annuity holder dies shortly after purchasing the annuity. However, there are solutions to this problem.

An immediate annuity can be set up to outlast the lifetime of the holder. If married, a client can buy a joint and last survivor annuity, which maintains payments as long as either the annuity holder or the spouse is alive.

If a client is single and has beneficiaries, a clause can be added to the annuity to guarantee payments for a period of time if the annuity holder dies before the end of that period. The longer the term added to the annuity, the less the annuity holder receives in monthly payments. Nonetheless, this cost can be offset by the knowledge that income will continue to be paid to the annuity holder’s heirs after his or her death.

Inflation

Immediate annuities provide lifetime, level payments. Some companies offer fixed-level, cost of living riders which create an annual percentage increase in the amount of the annuity income. In exchange for larger checks in later years, income is reduced in the earlier years.

Fees

With most fixed immediate annuities, there are no sales fees. Other types of annuities can involve paying charges such as a mortality and expense fee and an investment management fee.

Obtaining immediate annuity quotes is a simple process that often entails no more information than: state of residence, age, gender, and either the amount of money available to invest in an annuity, or the amount of money a client desires to receive on a monthly basis from the annuity funds.

An immediate annuity quote is one way of looking to the future and considering all the financial possibilities that exist for longer lives and those that depend on them.