Immediate annuities guarantee regular payments for a specified period or for a lifetime. Payments can be selected to begin any time within the annuity's first year.
These annuities can provide the transition from an accumulation phase to an income phase of retirement, when a safe, secure source of income is critical.
They're also ideal for converting large, lump-sum payments into an income stream, such as:
- Insurance proceeds
- Legal settlements
- Property sales
The chief characteristic is the ability to defer the tax obligation on a lump sum by distributing the payments (and associated taxes) over several years.
When an immediate annuity is purchased with funds on which you have already paid taxes, every annuity payment is a combination of return of the principal you paid (which is not taxed) and payout of income (which is taxed at normal income rates, not capital gain rates). This has the benefit of stretching tax payments over a longer period of time.
Some of our immediate annuities offer optional features to give you greater flexibility in how you receive your income. View the associated products to learn more.