immediate annuity


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Immediate Annuity

An annuity that the annuitant purchases with a lump sum payment and from which he/she begins to receive payments immediately. An annuitant often buys an immediate annuity after he/she has reached retirement age and wishes to receive his/her savings or other money in an organized manner. An immediate annuity may either be fixed or variable; that is, payments may remain constant throughout the life of the annuity (or the annuitant's natural life) or they may change according to the performance of the investments made by the lump sum payment. See also: Deferred annuity.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

immediate annuity

An annuity that is purchased with a lump sum and that begins making payments one period after the purchase. Immediate annuities are most commonly purchased by people who have accumulated a sum of money and are ready for retirement. Compare deferred annuity.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Immediate annuity.

You buy an immediate annuity contract with a lump-sum purchase. You begin receiving income from the annuity either right away or within 13 months.

A fixed immediate annuity guarantees the amount of income you'll receive in each payment, based on the claims paying ability of the insurance company selling the contract.

A variable immediate annuity pays income based on the performance of the annuity funds, or subaccounts, you select from those available through the contract.

Immediate annuities appeal to people who want to convert a sum of money to a source of regular income, either for themselves or for another person. One way they're frequently used is as a source of retirement income.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The cash flow from an immediate annuity will be taxed in one of two ways, depending on where the annuity is held.
A person who would qualify to purchase long-term care insurance would be too young and healthy to enroll in the long-term care benefit plan or the medically underwritten immediate annuity.
Clients can structure payouts from an immediate annuity in many ways to meet their needs and minimize the need for a rider to access their income.
So, as more and more people start to buy deferred annuity plans (where you accumulate a pension fund during working life), experts say a large number of people will opt for immediate annuity plans such as VPBY too.
In the absence of social security, annuity products help customers earn guaranteed income." So, as more and more people start to buy deferred annuity plans (where you accumulate a pension fund during working life), experts say a large number of people will opt for immediate annuity plans such as VPBY too.
In the absence of social security, annuity products help customers earn guaranteed income." So, as more people start to buy deferred annuity plans ( where you accumulate a pension fund during working life), experts say a large number of people will opt for immediate annuity plans.
Upon purchasing an immediate annuity, an individual makes an initial cash deposit with the annuity company and then receives monthly income distributions, either over a certain period or for life.
The firm has launched a non-linked immediate annuity plan, Pension Guarantee, which would provide the option to extend the annuity (pension) to the spouse of the person covered.
Eventually she converted the contract to an immediate annuity.
One of the products purchased is a single-premium immediate annuity (SPIA)*--which is an annuity where the insured makes a single large premium payment to the insurance carrier in exchange for the right to receive back level (usually annual) payments for the remainder of his or her lifetime.
We all know the primary reason for an agent to suggest this approach is that the commission for selling a deferred annuity is much higher than for an immediate annuity. I also blame the carriers and the FMOs for feeding into this "learn this product and go" marketing plan.