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5 Benefits of Immediate Annuity

Updated on December 1, 2017

Annuity plan refers to a service that is provided by investment companies and banks. Under this plan, an amount is paid to the company which, after a certain period, is returned to the user of the account on a regular basis in a predetermined amount. This is a popular method of saving money for the future purposes of retirement or in cases where you are the recipient of large amounts of money which you’d rather not spend all at once.

Now there are many types of annuity plans available for people from all walks of life. There are fixed plans and variable plans. There is a plan by which in the event of your untimely passing, your family could have access to the money, thus, securing their future. There are also plans in which the regular payments, called the annuitization phase, starts immediately after the lump sum money is deposited in a single installment.

An immediate annuity is famous among people who come into large amounts of money and rather than having access to all of it at once, get regular deposits from the company. There are many benefits to such a plan, some of which are listed below.

1. Constant Cashflow

The economy can be unreliable as it depends on any fluid factors. Even if you are working after your retirement, it is always good to know that there will remain a constant inflow of cash per month which takes away the worry if your month was not very fruitful.

An instant Annuity gives you this option. Depositing a lump sum amount after retirement in a plan that starts the regular deposits immediately after the deposits, will ensure a safety net which you can always rely on.

2. Safety from Over Expenditure

When an individual comes into money like a lottery or a large inheritance, the itch to buy extravagant things is almost unquenchable. A large amount of money makes one lose track of the rate of outflow, causing the well to dry before you know it.

If you put these large amounts of money in an immediate annuity, the golden egg remains well and safe in the hands of the company and every month you receive the predetermined amount, which allows you to enjoy your gain for a long period of time.

3. Typically Higher Returns

Keeping money in storage has no effect on it. The amount neither slides down or up, which is why people invest and look for ways to increase the assets. The steps that one takes for such may cause dire losses that are difficult to recuperate from.

There are typically higher returns when compared to other means like mutual funds and bonds. These gains can be seen with the increases in your monthly amount.

4. Protection against Defaults

For those who are unaware, defaulting refers to the not being able to pay the interest or principal on a loan or any debt you owe towards a company. In these situations, all the assets of the individual are seized by the company.

Being an insurance product, it remains safe and protected from default by the assets of the company you issued the annuity with.

5. Compensation

If the company you have been dealing faces any financial trouble, they will be ready to pay you a compensation amount which could differ from company to company or based on the deposited amount.

An immediate annuity is a good solution for people who want to manage their money in a judicious and safe manner. This is a sure way to make arrangements for a comfortable life and have the satisfaction of a monthly hassle free inflow of money.


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