Most seniors want stability and safety in their financial investments. Fixed immediate annuities offer these vital characteristics apart from other benefits, making them popular with seniors. Immediate annuities ensure that you get a check each month. Moreover, a part of the income you receive is treated as a tax-free return of principal you have invested. These monthly payments will continue for the duration of the contract provided the annuity company offering the immediate annuity product remains financially sound (the annuities you purchase are guaranteed by the ability of the issuing company to pay the claims).
Some consumers perceive immediate annuities as illiquid, irreversible investments that cannot meet the needs of future changes in lifestyle. However, a few immediate annuities that offer options provide flexibility when you are planning your finances. For instance, a few immediate annuities have a refund feature that ensures that if you pass away before having your initial premium returned in the form of payments you have received, the beneficiaries you name will continue to receive payments until all of the premium is paid back. Some other immediate annuity product providers have a commutation feature that enables one to revoke the lifetime annuity payments by opting for a lump sum payment (at a cost).
Some immediate annuities offer an option to allow you to obtain extra cash at specified anniversary dates. For instance, you might want a larger payout at the 10th or 15th anniversary of making the investment. By opting for this option you will reduce future payments. The distribution could be fully taxed, so you need to consult a tax professional before deciding.
Some times one needs money for emergencies such as paying for caregivers or repairing a home. Certain immediate annuities companies are willing to let you take up to half-a-year's payments at one go. However, this would mean no checks for the next six months (such payments might be fully taxed, so consult a tax professional before you withdraw the money).
Some immediate annuities also have the option of providing a cash benefit to heirs. This is normally a pre-determined percentage, say 25 percent or 50 percent of the initial investment. By choosing this option, your monthly annuity checks will be for smaller sums because some funds will go to beneficiaries.
Maybe the most important flexibility advantage is that because immediate annuities provide an income you cannot outlive, you have more financial freedom and possibly, the ability to take more risks with other funds. Immediate annuities provide a certainty that other investments do not, allowing for grater uncertainty in other arenas of financial life.
To sum up, immediate annuity products come in a wide variety of choices to meet your current needs and help plan for future requirements as well.