Saturday, 31 October 2020

What Is an Immediate Annuity and How Does it Work?

What Is an Immediate Annuity and How Does it Work?
30 Sep
10:09

An immediate annuity, also known as an income annuity, is a type of annuity that begins paying out right away. With an annuity, you enter into a contract with an insurance company. In exchange for your payments, the insurance company will send you disbursements for a predetermined term — sometimes for the rest of your life.

Immediate annuities are distinct from deferred annuities, which have an initial accumulation phase during which the pool of money grows, followed by a later payout phase. Both immediate and deferred annuities are good tools for funding your retirement, though they serve different purposes. A deferred annuity allows your money grow tax-deferred so you’ll have income at a future date, while an immediate annuity is useful if you need regular income right away.

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Louis DeNicola

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Source: https://www.magnifymoney.com/blog/banking/immediate-annuity/

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