single premium immediate annuity

Immediate Annuity Basics

Fixed Immediate Annuity. With a fixed immediate annuity, the amount of income you receive each month will be a fixed amount; it will stay the same throughout the term of your annuity contract.

Inflation-Indexed Immediate Annuity. An inflation-indexed immediate annuity is a form of a fixed annuity. You receive a guaranteed stream of income from the insurance company, and that income will rise each year based a predetermined formula; usually the increase is tied to changes in the CPI (Consumer Price Index).

Variable Immediate Annuity. With a variable immediate annuity, the insurance company does not provide a guaranteed stream of income; instead the amount of income you receive will depend on the performance of a portfolio of underlying investments, usually stock and bond mutual funds.

Single Premium Immediate Annuity. When you buy an immediate annuity you will have to choose the term of the annuity, which will determine how long your guaranteed income stream will last. it is a practical tool for turning a lump sum of cash into a lifetime stream of income.

single premium immediate annuity Tips

Consider carefully before participate in the plan. With most immediate annuities, you cannot change your mind once the contract is purchased. For example, if you have been receiving your stream of income for three years, and you suddenly change your mind, you cannot cancel the income stream and get your remaining lump sum of money back.

Estimate your living expense. If a retiree can calculate his core living expenses, compare them to his anticipated social security payments, pensions and other guaranteed lifetime distributions he can identify the anticipated shortfall. Using a single premium immediate annuity, he can then convert a portion of his retirement savings into a guaranteed monthly payment stream to cover the difference.