In an immediate annuity, the contract is purchased with a single lump-sum payment and in exchange, pays a guaranteed income that typically starts within 30 days.
You’re basically exchanging control of your money for a guaranteed stream of income.
Pros of Immediate Annuities
- Guaranteed income
- Simple concept
- Pension alternative
- Generally gives a higher payout than other annuities
- No fees for this type of annuity
Cons of Immediate Annuities
- Inflexible and irreversible
- No growth opportunities
- Typically no inflation protection
Immediate Annuities Are Best For:
- Pension replacement/li>
- Immediate income needs
- Estate distribution – control how your money is given to your beneficiaries