An immediate annuity is an investment policy purchased from an insurance company making lump sum payments. As retirement investments, it provides continuous income throughout the life or for some fixed time period as selected by the annuitant.

Immediate Annuity can be defined as, “Type of contract which begins paying out within one annuity period – e.g., 1 month or 1 year, after it is purchased - and pays principal and earnings to liquidate the principal over some time period.” It is also known as a ‘Single Premium Immediate Annuity.’

The income on immediate annuity starts within one year after purchasing the policy. You also have to decide whether the annuity payments are exclusively for the policy holder or for any other person. You have to keep the following factors in mind while investing funds in immediate annuity;

The least amount needed for the investment is normally around 10,000 US dollars that is tax deductible. The investment can also be a non-taxable payment devolving on the kind of investment you want. The monthly repayments as well as interest rates remain the same during the life span of the investment.

The insurance company issuing the policy will guarantee that the rate of interest and the policy payments remains the same, and the payments that you will get from your immediate annuity depends upon the amount that you have paid in. If you purchase your policy privately, then a big proportion of your monthly disbursement will be tax free because the government considers the payment as return of capital, but the part considered as earnings is taxable.

An immediate annuity is a healthier investment, which provides you serenity for the future. Immediate annuity is US State specific and all insurance companies do not provide it. Browse the market properly while purchasing an immediate annuity, you can also take help from a financial advisor and ensure that you have chosen the best policy.

For any help regarding immediate annuities, click here or call an Annuity Specialist at AnnuityForLife.com, 1-888-261-6237