Things to Know Before You Invest in Immediate Annuity

Single Premium Immediate Annuity or SIPA is fast gaining popularity among prudent investors, who are looking for a more secure future, especially that particular time after retirement. Many retirement plan funds usually work on a basis wherein it would pay you a steady income from the age of retirement and for another twenty or thirty years. What these insurance companies fail to realize is, what happens if you live longer than the thirty year period and who is going to provide for that? Such investment companies also do not take into consideration the fact that old people are often prone to ailments. They never provide for that, thus letting senior citizens looking for other income generation options.

SIPA on the other hand definitely is one of the best investment plans for the present and the future if you are looking at making it your retirement plan. Since most of the funds locked in immediate annuity are considered as returnable principal, they are actually exempt from taxation. Only a small or marginal portion of your investment is actually taxed. As one of the best planning techniques, immediate annuities are also used to protect your assets. These investments are procured to simplify the actual medicaid process. When you purchase immediate annuities, your estate is effectively removed, thus making you eligible for medicaid application. If you are looking for a plan that would help you qualify for medicaid then it would be best to work alongside an attorney and a financial planner to get the best out of immediate annuities. SIPA is also well sought after for another benefit called creditor protection, wherein you would be exempt from paying creditors if an unlikely event is to leave you broke.

SIPA might sound like the best gift on the planet, but you should realize before investing that such a plan is actually a life long commitment. Such investments are also taken for their security and not gains. Hence if you are looking for an investment option that would give you a steady source of income on retirement, then you should choose this. If making high profits is on the agenda or if high gains are on mind, then this particular plan will not work for you.

Now think carefully and ponder over these facts. With time you would be able to find out if immediate annuity is the investment plan for your future.

We have many more Financial Planning Help Articles Now Available.