While immediate annuities are surely not a new product, some of the newer choices out there are making them some of the best immediate annuities yet. The Coshocton Tribune’s Scott Webb just wrote about some of the newer immediate annuity choices you have in “The ‘new’ immediate annuities.” An immediate annuity is similar to a pension that you privately own. After paying a lump sum of money to an insurance company, you get monthly payments for the rest of your life. In its most basic form, you receive the highest monthly payouts, but your money is gone once you die.
Many people have found an immediate annuity unpopular because they are worried they will lose a lot of their principal should they die early. New options for immediate income annuities relieve some of that worry. By adding death benefits to your immediate annuity, your spouse will continue to receive your monthly payments until they die or for a pre-specified time period. You can also choose a cash refund option so that your beneficiaries will get a cash payout of any remaining premium money that you haven’t received in your monthly withdrawals. While your monthly payments will be less by adding on these options, they alleviate the worry about losing your money with a premature death.
Inflation is another consideration when purchasing an immediate annuity. In twenty years, you’ll be glad that you accounted for rising prices when purchasing your immediate annuity. Some immediate income annuities can actually be deferred for anywhere from 2-10 years. If you choose to defer receiving your monthly payments, those payments will be higher than if you had taken the money right away. There are so many new choices out there when considering an immediate annuity, so check with an advisor to get your personal best immediate annuities.
Written by Rachel Summit
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