Annuities can provide you with an array of income options. An immediate annuity, for example, offers you and your spouse a guaranteed lifetime income which you can never outlive but with no ability to alter your income stream once begun. A deferred annuity, on the other hand, permits you to start and stop receiving income at your discretion and even to withdraw a lump sum from your account, but it does not guarantee that you and your spouse will never run out of money. So as you review your choices below, consider that a combination of annuities may give you the optimal balance between both income and flexibility.
When would you like to begin receiving income from an annuity?
An immediate annuity by definition begins paying you immediately, which typically is one month from the date you purchase your annuity. An immediate annuity is ideal for someone who has reached retirement and would like to begin receiving a dependable monthly income which can last a lifetime. Only an immediate annuity can ensure you will never outlive your retirement income. If you're interested in this type of annuity you can get an instant online immediate annuity quotation here.
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If you are not planning on receiving annuity income for several years, then a deferred annuity would be a better choice. Deferred annuities offer interest rate guarantees ranging from three to ten years. For a list of current interest rates offered by deferred annuities click here. A deferred annuity can be structured to disperse earnings (beginning at any time) or it can be rolled over into an immediate annuity at a later date. A deferred annuity can be cashed in if the funds are needed and may be subject to surrender fees and market value adjustments. Immediate annuities, generally, are irrevocable and non-refundable.
Would you like to draw out interest only or interest plus a portion of the principle (thereby depleting the annuity over time)?
An immediate annuity converts your premium ("investment") into a guaranteed lifetime income. Every month you receive some of your premium back with interest (until the contract expires, at death or after a specified period of time). Immediate annuities are designed to provide a higher level of income than offered by deferred annuities because the income annuities return some of your own premium each month with the interest. Your cash flow is therefore usually greater with an immediate annuity.
A deferred annuity is more flexible than an immediate annuity. It can be structured in a number of ways depending upon your income needs. A deferred annuity can be set up to just accumulate earnings and not make any disbursements, it can be set up to disburse interest only, and some contracts can even be structured to pay interest and up to 10% of the account balance annually. It is possible to create a steady monthly income stream from a deferred annuity by taking systematic withdrawals. Depending on the terms of your contract, this can be done as soon as a month after you buy your annuity. However, a deferred annuity will not guarantee to pay you for your lifetime. That is the province of the immediate annuity.
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Would you like to be able to "cash in" your annuity?
Deferred annuities are generally structured to mature over three to ten year periods, after which you have the freedom to withdraw your funds in a lump sum, or roll over the contract. It is also possible to surrender a deferred annuity contract and receive your account balance in a lump sum during the 3-10 year guarantee period. You would likely be subject to a surrender fee and a market value adjustment, both of which can vary by company. This type of liquidity is generally not available with an immediate annuity. When you buy an immediate annuity you purchase the insurance company's promise to pay you a regular income for the duration of the term you select. Period.
Free help with your income annuity decision
Selecting the right combination of income annuities can be confusing. We have the experience and expertise to guide you through the product maze. First, we help you to compare the annuities which are available for your situation. If you decide you would like to buy an annuity we help you to complete the application forms and send them to the company of your choice. We track your annuity for you through the underwriting process so your policy is issued promptly and correctly.
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Since 1983 more than 10,000 annuity buyers have secured a more comfortable retirement by selecting their income annuities through our service. Would you like to learn more about us? Do you have questions about how an income annuity can work for you? Just call our friendly and knowledgeable annuity specialists at 866-866-1999. We would be glad to answer all your questions about annuities.