If you've been looking for ways to build up your own retirement fund, one of the things you should think about is investing in a lifetime annuity. If you're not familiar, these are private insurance plans that pay out like a retirement fund. Since they're private, they aren't affected by the government's funding decisions and budget concerns. Here's a look at some things you should know about lifetime annuities.

How Do They Work?

Buying a lifetime annuity is basically an up-front investment in an insurance policy. You'll pre-pay the balance of the policy and then you receive a monthly amount starting at retirement. The key to making a lifetime annuity work for you is to invest a significant lump sum in the policy initially. You can use CDs, bank savings and even stock purchases to fund this account, and once it's paid, you're guaranteed those benefits at retirement. You're not required to have a medical exam to obtain a policy like this, nor is it funded by or at risk from government budget decisions.

Why Choose One?

The most significant benefit of this type of annuity is the fact that your benefits are guaranteed no matter what. You can even get an advance on the payments if you find yourself in a serious financial emergency. In most cases, you have to reach a certain age before you're eligible for this, but it's an option for those times when you might need it.

Another benefit to this type of premium investment is that you don't even lose your investment if you die before the premium is exhausted. If there are any funds left in your lifetime annuity when you pass away, those funds will automatically be paid out in full to your heirs. In addition, if you live long enough to exhaust what you paid in, your monthly benefit amount is still guaranteed for the rest of your life.

What Should You Consider Before Investing?

It's important to note that the initial investment will need to be significant if you want to secure an annuity like this. Then, the insurance company will invest some of your premium to grow profits. This is done to help cover the cost of those policy holders who outlive their initial deposit.

A lifetime annuity is a beneficial investment for anyone who has the funds to invest. Remember that the more you invest up front, the greater your monthly retirement payment will be.