How do immediate annuities work?

You make one large, lump-sum payment to the insurer, and in return, you’ll receive a guaranteed income stream from that payment. You can set up your annuity to pay you for a certain number of years, or for the rest of your life. What makes immediate annuities unique is how quickly you start receiving payments.

Are immediate annuities a good investment?

This option can be great if you’re familiar with stocks, bonds, and mutual funds, and willing to take more risk with the growth rate of your annuity — but unlike fixed and indexed annuities, your principal may lose value if the market underperforms. Learn more about other types of annuities What are the pros & cons of immediate annuities?

When do annuities start paying?

According to the Insurance Information Institute, payments can begin as soon as a month after the annuity is purchased. In other types of annuities, such as deferred annuities or fixed annuities, you typically pay into it over a significant period of time and, eventually, they can result in payments.