Deferred Annuity versus Immediate Annuity - By: Mike Anderson

An annuity can be described as a mutual agreement between the insurance organization and the insured. Through this financial agreement the insured receives regular payments usually after retirement. The concept of annuities is becoming popular everyday. However, you would be surprised to know that this concept originated about 200 years ago. An annuity is generally issued by the insurance company through its licensed agents. Annuity can be classified mainly into two types – immediate annuity and deferred annuity.

You should apply for immediate annuity if you need the amount immediately. On the other hand, the deferred one builds up over time only to be converted as income in a later period. A crucial difference between both these annuities is that the deferred one can be purchased with a one time payment or with a chain of usual payments. The deferred annuity is definitely considered as a better investment for the future. It can prove to be an asset in your post retirement life.

Immediate annuity will prove very useful for an individual who have received a good amount of money all of a sudden, and now wants to manage it properly. The concept of immediate annuity which is fixed has become more popular than any other immediate annuity. The reason for it is simple; it promises assured payments. But you can make good amount of profit with a variable immediate annuity as well. On the flip side, it has some risks and uncertainty involved with it as well. Therefore, it is important to prioritize your need before deciding on a particular plan.

However, a deferred annuity can give you a sense of security. The return from deferred annuities can be of two types. With the first type you are assured of receiving continuous monthly payments for a specific period of time. On the other hand, the second type will give you the option of acquiring a one time payment on the date of maturity. The annuity agreement will clearly specify the date when you can expect the income installments to flow into your account. This date is known as the maturity date. The best part of this type of annuity format is that you have the liberty to select the kind of return you want. However, you have to be very careful about the annuity quotes; they are crucial for acquiring the best annuity rates. You would do well to take some tips from some of the specialists in the trade. They would be able to guide you about the annuity quotes and the annuity rates in the right manner. Another good option is to take quotes from various companies; it will allow you to compare and study the rates perfectly.

However, first you need to arrange for a handsome amount in order to enter the annuity agreement. The accumulated interest over your hefty deposit amount would ensure a bright and secure future. Therefore, deposit amount is important; the more you deposit, the better it is for you and your family.

About the Author

Mike Anderson is a business consultant who has good information on deferred annuity and annuities. For more information visit http://www.immediateannuities.com/

Article Directory Source: http://www.articlerich.com/profile/--Mike-Anderson/93079

Additional Articles From - Home | Finance | Personal finance