Immediate Annuities - SPIA's

Single Premium Immediate Annuities (SPIAs), as the name suggests, immediate annuities start paying out right away, so they're are frequently used by people already in retirement. A deferred annuity can also be converted into an immediate annuity.

Immediate annuity is a vehicle for distributing savings with a tax deferred growth factor. Insurance company assumes the risk of the payouts lasting annuitants whole life in case of immediate annuity. Generally one can never outlive these payments and various choices are available for payment set up as well. There are some plans available which allows change in payment structure at a later date.
An Immediate annuity is a type of annuity in which the contract owner starts getting payments after a single premium is paid. Payments can be made on a monthly, quarterly, annual or semi-annual basis. The rate of payment in immediate annuity is of two types, fixed rate and variable rate. The fixed rate guarantees a set income that will not fluctuate, whereas in variable rate payments will fluctuate according to the performance of selected investment the annuity is based on.

Immediate Annuity provides security and stability to its buyer by providing stable lifetime income or a guaranteed income for a specified period of time. It is simple and easily manageable because the annuitant does not need to manage his/her investments, watch markets, report interest or dividends. Immediate annuities provide quality return because insurance companies generally give higher interest rates on annuities than CD or treasury rates and also the principal is returned with each payment. We suggest you to select annuity product carefully according to your need due to the fact that most conventional immediate annuities cannot be revised or cashed in.

An immediate annuity can be purchased with funds from a variety of possible sources, such as: a maturing certificate of deposit, monies which have accumulated in a deferred annuity account; or funds from a tax-qualified defined benefit, 401k or IRA account. Under current tax law, a portion of each payment received from a non-qualified immediate annuity is tax free until your total premium is recovered. The remainder of each payment will be taxed as ordinary income in the year you receive it.

Immediate annuities (sometimes called income or payout annuities), are pretty straightforward - basically a mirror image of a life insurance policy. Instead of paying regular premiums to an insurer that makes a lump-sum payment upon your death, with an annuity you give the insurer a lump sum of cash in return for regular income payments until you die. (Actually, you have several options, including payments for a specified period of time - say, 10 or 20 years - or payments that will continue for as long as you or your spouse is alive.)

When you are no longer in the accumulation period, your first concern should be adequate income for life without the possibility of running out of money. Then, consideration should be given to conserving assets, and to a plan of distribution that will minimize taxes and probate costs.
The three stages of life are accumulation of property, conservation of property, and distribution of property. Most people spend much of their lives accumulating and managing their assets.

Despite inflation, good planning requires some fixed dollar income for life. Refund Annuities are an ideal fixed dollar investment.