Your Annuity Options
Immediate annuities can provide dependable security: a stream of income payments that will continue for the rest of your life or for a period you select. If you are about to retire, an immediate annuity may be a good place to put a large lump sum of money accumulated through a deferred annuity, a retirement plan or other savings vehicle.
To purchase an immediate annuity, you make a one-time payment, and distributions typically begin within a month. Immediate annuities can be fixed or variable, just like deferred annuities. The income payments you receive from fixed immediate annuities are based on the amount you contribute and the interest rate environment at the time of purchase and will not change. The payments from variable immediate annuities fluctuate based on the performance of the investment options you chose. Although payments may go up and down, variable annuities are designed to provide income that you hope will rise over time to help you keep pace with inflation.
You can choose from a number of options for receiving income from an immediate annuity. A life option guarantees a specified income for as long as you live. A period certain annuity guarantees an income for a specific period of time, such as 15 years. Perhaps the most popular choice is known as a joint and survivor option, which guarantees that income payments will continue for the life of the primary owner and a second person. The guarantee is made by the insurance company issuing the annuity.