What Are Immediate Annuities?

For those in need of steady income payments within a short amount of time, immediate annuities can be a great choice.

With an immediate annuity, you pay a single premium and almost immediately start receiving retirement income payments at the end of each payment period, which is usually monthly or annually. An immediate annuity is irreversible once it has been purchased so it is not ideal for consumers who may need a lump sum of money in the case of an emergency.


No matter what we prefer, planning for retirement is changing and will continue to do so. Because of this, it’s important that people prepare now for their future. For many people who are retired, immediate annuities are a product that can assist with accomplishing this goal.


First, let’s discuss a general definition of annuities. Annuities are insurance products that function as an agreement between an individual and a financial institution. The person agrees to make a lump sum payment to an insurance company, who makes regular payments back to the person throughout the life of the annuity. Annuities are long-term products designed to supplement retirement income and product guarantees are backed by the financial strength and claims-paying ability of the issuing insurer.

There are two basic kinds of annuities, deferred and immediate, that determine how these payouts occur. Deferred annuity payments start at later date and time while immediate annuities can start payouts almost immediately.

For those in need of steady income payments within a short amount of time, immediate annuities can be a suitable choice. Another attractive feature of these annuities is they feature tax-deferred growth, which means you aren’t required to pay taxes on any potential increase until the money is withdrawn. Although these payments will be tax-deferred, any distributions may be subject to ordinary income tax and, if taken prior to age 59 1/2, an additional 10% federal tax.

There are many companies out there that sell immediate annuities, providing you with a lot of options. By working with Grace Advisory Group, you’ll gain access to many of these companies and have options available to you for immediate annuities.


  • Low risk: Immediate annuities provide a low-risk investment option to people averse to taking financial risk.
  • Flexible payout schedule: You can choose to receive income from an immediate annuity on a monthly, quarterly, semi-annually or annually basis.
  • Regular income stream: An immediate annuity allows you to plan for expenses by providing a check for a fixed amount on a set date.
  • Better returns: Immediate annuities offer attractive rates and income compared to other fixed deposit products such as CDs.