These are some of the Tips and Tricks we share about Immediate Annuities at AnnuityStraightTalk.com
This kind of product is called an ‘immediate fixed annuity’. What happens is that your insurance company would receive a premium from you, and you get paid a set amount each month until you die. Annuities have declined in popularity recently, as interest rates have also declined. They will still provide you with a consistent and safe income.
Because of falling interest rates, waiting until you are over 75 to purchase an immediate fixed annuity will provide you with the biggest returns. Your life span will be considered to be shorter in their calculations.
Annuity payments are calculated based on many factors, one of these being life expectancy, or mortality credits. A person who is ages 70 or greater typically has fewer years left in their life than a person who is younger. An insurance company will make larger payments to a person who is 70 or older based on the fact that they do not anticipate making these payments for a very long time.
Let’s compare the payouts for a 65 year old and a 75 year old with a $100,000 premium given to the insurance company. The 65 year old man received $7740 per year. For the 75 year old it was $10,068 annually. To really maximize returns, an 85 year old male could realize a payout of $14,688 per year.
So if you are in good health and can delay income payments, it may be worth it to wait until you are over 75. Of course, this also had a downside. When you pass away, all of these benefits are voided. Make sure you know what you’re getting into before deciding.
You should also keep in mind that it’s likely that interest rates will start going up again. The Fed infused vast amounts of cash into the markets and that cash is still there. Once the economy recovers, it is likely that we will experience higher rates and inflation. Because of this, you can wait for these increased rates prior to buying your immediate fixed annuity so that you are rewarded with better returns.
There are definitely Pros and Cons of Immediate Annuities.
A solution to these what ifs would be to purchase an immediate fixed annuity with a guaranteed payment for a set number of years, 5-10 years. With this annuity, if you die during the specified time period your heirs would still collect the monthly income payments. If the time period elapses and you’re still alive, you can get a new annuity which, since you’re older, can yield more impressive returns.
Before you purchase an immediate fixed annuity, be sure to do some research. Compare the different terms and rates that various insurance companies can offer you. Annuity Straight Talk can help you with this.
