ANNUITY FORM
GET a Precise Immediate Annuity Quote from ALL the ANNUITY COMPANIES.
We do ALL the shopping for you so you don’t have too. Best of all our Service is Free and there is no obligation. As your broker our goal is to get you the best possible annuity income and terms you deserve. We let the annuity companies compete for your business.
Immediate Annuity Calculator
When you buy an annuity, you are buying a stream of payments sometime in the future in exchange for your investment. As you design your contract, you need to decide when to start receiving payments. If you want to start receiving payments within one year of your purchase, you should buy an immediate annuity. 
This article discusses the features, advantages, and disadvantages of immediate annuities. If you want to learn more about these products, you can use our immediate annuity calculator to find the most up-to-date immediate annuity rates for your situation.
Annuity Stages
An annuity contract is divided between two stages. The first stage is the accumulation stage. During the accumulation stage, your annuity does not make monthly payments. The annuity company invests your funds to build your investment for the future. You can choose to invest your funds in guaranteed investments with a fixed rate of return or you can invest in the stock market with a variable annuity. A variable annuity gives the possibility of a higher return on your investment but can also lose money. A guaranteed investment gives you a safe, predictable return with no chance of a large gain or loss.
The second stage of an annuity is the distribution stage. During this period, your annuity makes monthly payments from your account funds. The annuity company continues to invest your undistributed funds, but your balance begins to decrease by your monthly withdrawals. Once you start taking payments from your annuity, you cannot stop them. Be sure that you are ready for payments before you convert your annuity into the distribution stage.
Immediate Versus Deferred
You have the option between selecting an immediate annuity or a deferred annuity. An immediate annuity starts to make payments within one year of your purchase. There is little to no accumulation period in an immediate annuity as it enters the distribution period almost right away.
A deferred annuity delays your annuity payments by at least one year. These products offer a longer accumulation period to build your account balance. You can convert your deferred annuity to the distribution stage at any point so you can start receiving payments whenever you are ready.
Length of Payments
When you select an immediate annuity, you need to decide on how long you want to receive payments. A longer period of payments results in a lower monthly payment for the same investment. Your contract makes lower payments for a longer period so your account does not run out of money.
You can design your immediate annuity as a fixed annuity or a life annuity. A fixed annuity has a set schedule of payments. It makes the same number of payments no matter what. If you die during this period, payments continue to your heirs. Once the payment period ends, your contract is complete and you stop receiving payments.
You can also design your immediate annuity as a life annuity. A life annuity makes monthly payments as long as you are alive. There is no set expiration date for a life annuity. Once you die, the contract ends and no payments are made to your heirs. The size of your payments from a life annuity depends on your age. Younger investors are expected to life longer and receive more payments than older investors. As a result, younger investors receive a lower monthly payment from life annuities than older investors with the same investment.
Advantages:
The advantage of an immediate annuity is you start receiving payments right away. There is no delay on your monthly payouts so you start seeing a return on your investment immediately. Your undrawn funds grow with the annuity company while you receive payments so you still see some growth on your investment with an immediate annuity.
The immediate annuity, like all annuities, offers a significant tax advantage. You do not owe tax on your investment gains as long as the funds remain in the contract. An immediate annuity lets you start drawing income while earning tax-deferred gains on the rest of your investment.
Disadvantages:
A disadvantage of the immediate annuity is its lack of a pure accumulation period. Since this contract starts making payments right away, there is less time for your investment to grow. You receive a lower total payment from an immediate annuity than from a deferred annuity.
Another problem with immediate annuities is they do not let you pause your distribution period. This is true for all annuities. You cannot stop payments midway through your contract to give your investments more time to grow. You do have the option of cancelling your entire annuity contract and taking out you balance, but this can be a costly decision. You could be charged early withdrawal fees by your annuity company and taxes by the government for cancelling your contract. Because of this lack of flexibility, you must be certain of your decision to start receiving payments before buying an immediate annuity.
Suitability:
Immediate annuities work well for investors who need income right away. Newly retired workers often purchase immediate annuities with funds from their retirement accounts. Since their funds have grown through the retirement plan, retired workers do not need a long accumulation period. They do need immediate income to replace their lost wages so these products work well.
Immediate annuities are not good options for investors looking to grow their assets for the future. The lack of an accumulation period hurts the return of immediate annuities. If you do not need money today, a deferred annuity is a better choice.
Immediate Annuity Calculator:
If the features of an immediate annuity fit your needs, you can use our immediate annuity calculator to learn more about this product. The annuity calculator determines up-to-date quotes from the best annuity companies in the industry. These quotes show your expected monthly payment for a given investment. Simple enter in your age and desired investment in the calculator and it will determine your results. You will receive the quotes by email or phone.
