Immediate Income Annuity - A Better Choice for the Retirees
By: Mike Anderson
Submitted: 2011-04-20 23:15:35 | Word Count: 538
Everybody wishes for a stress-free retired life. But to ensure a relaxed retired life, one must secure his/her financial future. When it comes to investing minimum risk but enjoying maximum benefit, a single premium immediate annuity (SPIA) may be a preferred choice for the individuals. An annuity may be of different types including fixed or variable, immediate or deferred, qualified or non-qualified etc. But the income annuity on offer by SPIA is of immediate type. The annuitants receive the amount of investment plus the accrued interest through immediate income payment after regular interval. SPIA is also known as 'single premium' as an individual is required to deposit the lump sum to ensure his/her financial security.
Such income annuity is often considered the best option for the retirees as they can receive a streamline of payments after the retirement. But extensive market research and an expert's valuable advice are what help one take the best decision in this regard. Let us suppose, a sixty year old person gains an astronomical amount in a lawsuit. So, it is just like a pauper becoming a millionaire overnight. In this case investment into an income annuity is the better choice for him. With the facility of immediate payment as offered by the SPIA, the person will earn income from the next month after he makes investment.
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By purchasing such an income annuity policy, an annuitant can earn monthly income for 10-15 years or may continue to receive the regular payment till he breathes his last. The choice between the fixed and lifetime payment is guided by many an important factor including the annuitant's age, amount of single premium and of course the interest rate offered by the insurance company. The aged personnel will derive the optimum benefits by investing into the lifetime income annuity policies. Now take the case of a fifty-five year old lady who has won $200,000 in a lottery. But she has an outstanding amount of mortgage loan to pay off. In that case, the lady must try to clear the dues and continue to work for a few more years to earn enough income to support her throughout the twilight years. In such case, an income annuity scheme by the SPIA is not a suitable choice for her.
Each individual has a unique need but an income annuity may be a good solution for those who are either retired or about to retire. Most of the immediate annuity policies require the annuitants to be at least fifty-five years old. The majority of the individuals prefer to go with a SPIA policy. It is because they either have no concrete plans for their advanced years or no adequate amount of pension. But prior to buying an income annuity policy, the investors must weigh both the pros and cons so that they do not end with making a wrong choice. Some consider the deferred annuity as the best choice for them. Still, assessment of one's financial objective is a must to select the best pick in the market.
