What Is The Purpose Of A Single Premium Immediate Annuity?
What Is The Purpose Of A Single Premium Immediate Annuity? To have a steady, reliable income for the remainder of your life, but there is more.
What is a single premium immediate annuity?
A single premium immediate annuity is a contract between you and an insurance company. With this type of annuity you pay the insurance company a lump sum payment and the payout to you begins immediately, and continues for a specified period of time or for the remainder of you life. The payout is guaranteed. How much you receive is determined by how long the the payments are expected to last, if beneficiaries will receive benefits and the amount of the deposit.
Pros -
The single premium immediate annuity is classic simplicity while at the same time able to adapt to many different circumstances and needs. These are ideal for situations like terminal funding, retirement, retired life buyouts and pension terminations. Those who would benefit the most from this type of annuity include employers, retirees, governments, and lawsuit participants. You may have noticed that Social Security is basically an annuity, giving a glimpse of what could be the true value of this type of annuity.
Cons -
These are low risk investments and as such are not made for maximum returns. The payout amount will always remain the same and will not adjust for inflation. Once your funds are committed to this investment, you cannot access these funds for any reason. This is a non-refundable purchase.
Overall -
For the most part, the pros outweigh the cons especially when you consider the many additional benefits that can include the following:
* Lifetime income – this is an option on all fixed annuities, and just one of many choices in how long and how to receive payouts.
* There are numerous guarantees to assure the owner that their annuity funds are protected making security and safety a valid reason to purchase an annuity.
* You can avoid probate, and have the funds delivered immediately and without delay to your beneficiary.
* Depending on your state, it is possible that the proceeds from your annuity is exempt from creditors. As this varies from one state to another, you will need to check with your state to find out what the laws are concerning creditors and your annuities where you live.
Related posts
- What Is A Split Annuity?
- When Purchasing An Annuity, Where Does My Money Go?
- Can I Switch My Annuity to an IRA?
- How do I Choose an Annuity?
- What is The Difference Between An Immediate Gift Annuity And A Deferred Payment Gift Annuity?
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