Top Local Immediate Annuities

The wild stock market roller coaster ride has left many people nauseas and unable to tolerate its steep drops and twisting turns. As a result, secure retirement vehicles such as immediate annuities have seen resurgence as people look for more stability and predictability for their retirement funds.  More planners are recommending that retirees invest a sufficient amount of their assets towards securing a guaranteed, minimum income as a safety net.

As millions of baby boomers knock at retirement’s door, the rush is on to identify top local immediate annuities that can be purchased for peace-of-mind.  More and more financial planners are recommending them, but how is one to know if what they are being offered is a top immediate annuity? With an understanding of how they work, a potential investor can evaluate an immediate annuity for its quality, security and its ability to deliver on the promise of a lifetime income stream.

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Inside an Immediate Annuity

An immediate annuity is, essentially, a contract between you and a life insurance company wherein the insurer takes your lump sum of money and promises to pay you a set amount of income for the remainder of your life.  The amount of income is based on the amount of your deposit, your age, and prevailing interest rates.  The larger your deposit and the higher the prevailing interest rates are, the higher your income payment will be. 

Also, the older you are in relation to your life expectancy, the bigger your income payment.  That’s because a portion of your income payment is a return of your principal, so the shorter your life expectancy, the more principal needs to be included in each installment.  The total payout is fixed so that, if you should live beyond your life expectancy, you will continue to receive the fixed amount.

Once the life insurer begins the monthly payments, your deposit is fully committed to the life insurer and the generation of income.  So, a critical factor in determining what makes a top immediate annuity is the strength and stability of the life insurer.  The guarantee of a secure, lifetime income stream is only as good as the ability of the insurer to deliver on the promise.  The top immediate annuity is the one that pays you in times of prosperity and in times of economic strife.

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Purchasing an annuity is a big decision. Online research is a good start, but prudent investors should discuss all their options and risks with an independent financial advisor. Request a free, no-obligation consultation today, along with a report of current rates on brand-name annuities.

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Identifying a Top Immediate Annuity

While there has yet to be a case where an insurer has failed to meet its obligation, a prudent person should still conduct his own due diligence into the insurer. The place to start is by researching their standing with the financial rating agencies. The standard bearer for the life insurance agency is A.M. Best which rates companies based on their financial condition and their claims paying ability. Companies that rate A++ are considered by A.M. Best to be superior. Companies with less than an A- rating ought to be considered suspect especially in these times of economic uncertainty.

Once you have narrowed your search to the most highly rated companies, you can begin to examine their performance in terms of being able to generate consistently competitive yields and payout rates on annuities.  An immediate annuity is an irrevocable commitment, so it is important to find a top annuity with a competitive payout rate (again, payout rates are based on prevailing interest rates). There are several annuity comparison websites that allow you to sort annuity providers by rating and by current yields that are being offered on their annuities.  AnnuityFYI is an example of a fairly comprehensive and easily navigated site.  

It is recommended that you consider life insurer brands with which you are familiar and that may have a local presence in your community.  When you have a lump sum of money committed to a financial institution its always more comforting when you can drive by a brick and mortar structure that has the name of your annuity provider on it.  It also advisable to meet , face-to-face, with a representative who can provide insight and guidance in the structuring of your annuity.

Within this select group of providers, you will want to examine their product offerings.  While the basic structure of an immediate annuity does not differ much between providers, it is important that you have access to some options that can provide additional guarantees, refund opportunities and payout options. These options can also be compared side by side.

Lastly, immediate annuities generally have low cost associated with them.  A top immediate annuity will be very competitive with its cost structure which is usually built into the premium calculation and the payout rate.  One way to base this comparison is to ask for a quote for a specific lifetime income payment.  The insurer will return an amount of a lump sum deposit that will be required to generate that income payment.  The higher the lump sum requirement, generally, the higher the costs of the immediate annuity.

A top immediate annuity is the one that will give you absolute peace of mind that, no matter what, you will receive a minimum income that you cannot outlive.  A top local immediate annuity is one provided by a highly rated company with local presence, that is manages itself well enough to produce competitive yields and offer the most options.

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