Why Consider Immediate Annuity

Written By: Cheri Cheesecake on February 20, 2010 No Comment

If you are interested in investing in an annuity, then you need to do some research about them so that you will be able to understand the terms and conditions being offered.

Typically, there are a variety of annuities; although, the standard type of annuity is a fixed annuity. In this kind of annuity, you are required to make a beginning investment in an insurance company. Then that same company pays you monthly. Although, there are a few alternatives to this set up, but this is considered the standard.

Life expectancy is the key factor when calculating your monthly payment. Your age and gender is used to compute this expectancy. The resulting factor will be multiplied to the intended initial investment and the result will be the guaranteed payment amount.

Commonly, with a fixed annuity you will be guaranteed the predetermined monthly payment. Although, if you do not receive all the monthly payments before you die, the insurance company gets to keep the rest. This is considered as a one way contract and to make things easier, if you live past the average life expectancy, you’ll be able to receive bigger amounts but if you die early, the insurance company will win big from you.

This type of annuity also has different types of contracts. There is the single life contract wherein the investor doesn’t have any plans of leaving any remainder benefits to the heirs. On the other hand, a contract that is joint is also available. For this one, the life expectancy is based on both the investor and the spouse. The monthly payments continue as long as both are alive.

Guaranteed period contracts are also available. This contract offers a lifetime payment or a specified period. This is useful for people who opt to guarantee payments for their heirs. In addition, it allows you to fully recover your entire investment.

Another contract is a remainder guarantee contract, which like the period style, guarantees payment to heirs. This insures full recovery of the investment as well.

Keep in mind that you should fully understand every detail of the contract before you purchase an annuity. Its best to know your options for peace of mind.

See Jim’s site for more information on single premium annuity and structured settlement company

categories: insurance, health insurance, investing, finance, interest accounts, saving accounts, annuity