Income Annuity
An income annuity is exactly what its name describes. These annuities turn some, or all, of your savings into a payment stream. The payment stream is almost always a monthly check. Obviously the amount you put in and how long you want the payments to last dictates the size of the monthly payments.

Other than a guaranteed pension plan, an annuity is the only financial product that guarantees you a lifetime income. Of course the guarantees depend on the claims paying ability and strength of the issuing insurance companies. Always perform due diligence and review the quoting carriers.

When you dig into this guarantee, you learn the insurance company pays you income you cannot outlive. You could go so far and call it a lifelong retirement paycheck. These kinds of annuities are generally bought with a large lump sum. Often an inheritance will fund this kind of annuity.

The benefits are immediately obvious. First, the income contributes to maintaining your standard of living. Next, it can be used to cover recurring living expenses. It inherently creates the freedom from having to manage your savings in your retirement years so that you don’t have to generate a means of income.

The income can also stretch to provide money for your spouse and/or heirs. You have to actively take steps to include the spouse and/or heirs but it can be done at the time you purchase the contract. Simply inquire with the agent about adding beneficiaries. In fact, as an actual licensed agent, I can tell you it is common place for me to ask if you have any beneficiaries you want listed.

Not all income annuities are created equal so it is very important to compare plans. Some have higher fees than others, some pay a better rate of interest, some have a longer surrender period meaning the redemption period costs last longer, etc. In other words, do your homework, perform your due diligence. Ask one hundred questions if you have to and make sure you understand the product before you purchase an income annuity.