Income Annuity Accounts
Get a Quote »An immediate income annuity is an investment account that begins systematic payments from inception. This process is referred to as an annuitization.
The annuity works very much like a guaranteed pension payment as it generates an immediate stream of income. The payments can be guaranteed for a specified period of years or the lifetime of the policy owner.
Future Income Planning
Consumers invest in immediate annuity accounts for many reasons. An annuity might be purchased to guarantee income for a retiree while also reducing stock market exposure and risk. Recent market volatility has increased the demand for safe, insured and guaranteed investment products.
Tax Avoidance and Protection
In some cases, annuities are purchased for creditor protection from a lawsuit or to avoid Medicaid recapture. In other instances, immediate annuities are purchased as part of a structured settlement in order to setup guaranteed income for an injured party. Additionally, annuity accounts can be used in conjunction with a structured sale to spread out realized capital gains taxes in large property or investment sales.
Guaranteed Lifetime Income Annuity
Consumers have several options when they purchase an immediate annuity or annuitize an existing annuity. A “life annuity with period certain” is one option. This choice guarantees interest payments for the insured’s lifetime. If death occurs during a designated period of time; five, ten, or fifty years for example, the remaining account value will be paid to the named beneficiary.
Other annuitizations guarantee payments, five or ten years for example, with no lifetime option. Additionally, several companies offer inflation protection on the monthly distributions. An inflation rider allows future payments to compound at a desired percent - usually 3% or 5%.
A more aggressive annuitization alternative is the “life annuity.” This option will have a higher systematic payment to the consumer, but no guarantees to a beneficiary at passing. Consumers concerned only with meeting income needs might select a life annuity to provide the highest guaranteed interest payment.
Income Strategy Defined
Immediate annuities are simply used for income purposes because of their guarantees. The amount of the systematic payment depends on age, gender and the sum of the initial investment. Many fixed and equity-indexed annuities can be transferred into immediate annuities after one or more years if necessary.
We work with several leading insurance companies to provide competitive annuity product and illustrations. Depending on your needs, we can recommend the appropriate policy type for you and your family.
Please contact us today for more information about immediate annuities.
