In Medicaid planning, deferred annuities are generally avoided because they are at the greatest risk of being considered an available asset under the new rules. Types of annuities. There are several kinds of immediate annuities, not all of which make payments for life. But all immediate annuities provide for periodic payments that are predetermined and specified when the contract is negotiated. Payments are made at various set intervals at least once each year, and any one contract must last for a period greater than one year.
Immediate annuities are usually irrevocable contracts.
Immediate annuities are afforded tax advantages in that a portion of each payment is treated as a return of capital while the balance is considered a payment of interest. Life only immediate annuities. This is an annuity under which the insurer promises to make periodic payments to the beneficiaries for the life of the annuitant. This kind of annuity produces the largest periodic payment among annuities that are guaranteed and continue for the life of the annuitant. No provision is made for heirs because the contract terminates on the death of the annuitant, and all remaining principal is retained by the insurance company.