Things You'll Need:
- Money to fund the annuity
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Step 1
Seek expert advice from an insurance agent you trust. She should be able to help you choose the product best for you, prepare the necessary paperwork and decide on the correct amount needed to fund your annuity.
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Step 2
Choose a single premium annuity when you have a lump sum of money from a retirement account or savings and you know you will need income for a designated amount of time.
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Step 3
Enjoy the guaranteed rate of interest that is promised for a chosen amount of time. It will not change. This rate is almost always significantly higher than you can find with other savings accounts.
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Step 4
Decide on a single premium annuity when you want a low-risk investment. This is especially important if you are at or near retirement age and you would not be able to recover from a large loss.
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Step 5
Be secure in selecting an annuity. The issuers must have sufficient reserves on hand, as well as interest to pay out for every security issued. Insurance companies are well regulated.
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Step 6
Pick another type of investment if you think you will need your money before you are 59 1/2 years old. If you surrender your annuity prematurely, you will be subject to a 10 percent federal-tax penalty for withdrawing before retirement age.
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Step 7
Choose how you want your annuity paid out. You can choose from monthly, quarterly, semi-annual or annual payments, depending on what your retirement needs will be.
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Step 8
Try to set up a single premium annuity that offers an installment refund. This type of annuity will pay the unused portion of the lump-sum premium (money that you initially paid in) in the event of your death.
