Everything One Should Know About Immediate Annuities

Retirement is that time of your life when your regular income flow comes to a halt. However, your lifestyle and medical expenses continue at the same pace. In this scenario, you need to plan for a source of income to support your lifestyle. This is where life insurance plans come into the picture. These plans are called annuity plans, and an immediate annuity plan helps you replace your income even in your retirement.

What is an immediate annuity policy?

If you look, immediate annuity meaning is a simple one. An immediate annuity is a type of life insurance pension plan. Under this policy, you receive a series of annuity payments for as long as you live. Besides, there are joint-life immediate annuity plans that guarantee annuity payments for the lifetime of your partner as well.

Features of immediate annuity plans:

1. A lump sum amount is payable under the policy which is called the purchase price
2. You can choose the annuity payment can be received monthly, half-yearly, quarterly or yearly
3. An annuitant is a person on whose life the annuity is paid
4. An annuity policy can be arranged to be received on a single-life or joint-life annuity. In the case of a joint-life annuity, the husband/wife can be covered. The policyholder is called the primary annuitant, and the spouse will be the secondary annuitant
5. The annuity terminates on the death of the annuitant

How do immediate annuities work?

• You purchase the immediate annuity policy by paying a lump sum amount at once.
• You have to opt for the annuity payment option that you suits your needs. There are several annuity payment options, and you can choose one as per your preference.
• You also have to choose the frequency of the annuity payments.
• Once you have purchased the policy and chosen the annuity payment plan and frequency, you would start receiving annuity pay-outs almost immediately. For example, if you buy the policy on 1st August and accept monthly payments, annuity payments would commence from 1st September
• The lump sum amount of the annuity is fixed and is stipulated beforehand.
• The annuity payment would last for as long as you are alive. In the case of joint life annuities, annuity payments remain until the lifetime of the last annuitant.
• On death, the payments and the policy will be terminated. The death benefit will be claimed on the annuity payment option that you have selected

Advantages of immediate annuity policies

• You get a stable flow of income which is concrete during your lifetime
• You can guarantee financial security for your loved one by choosing joint-life annuity where your spouse would get a pension if you predecease him/her.
• If you choose the annuity option which returns the investment price, you can leave behind something for your family.
• Immediate annuity plan assures that you are financially independent even after you retire.

Immediate annuity plans are the best investment vehicle if you have your retirement coming up. However, you can always use them in case you know that your loved ones will need some financial support. Do your research and compare all the plans from different providers before zeroing-in on a specific one.