Immediate annuity: calculator, comparison and alternative

Immediate Annuity Calculator

On the websites of the providers Versicherungskammer, ERGO, and Hannoversche, you will find calculation tools for the respective immediate annuity.

Immediate Annuity Providers With and Without Calculators

• Versicherungskammer Bayern (Direct link to calculator)
• ERGO (see “Calculate immediate annuity” link)
• Allianz (No calculator)
• HUK Coburg (No calculator)
• württembergische (No calculator)
• Europa Versicherungen (No calculator, Finanztest 2026/1 grade 1.7 test winner)
• Cosmos Direkt (No calculator)
• Debeka (No calculator)
• Zurich (No calculator)
• R+V (No calculator)
• Hannoversche (Direct link to calculator)
• Generali (No calculator)
• HanseMerkur (No calculator)
• HDI (No calculator)
• BW-Bank (No calculator)
• Finanztest 2026/1 – 31 Immediate annuity policies compared (EUR 4.90 for access to test results)

But as reassuring as the security of these guaranteed payments may seem at first glance: In practice, immediate annuities come with severe disadvantages and often prove to be an unprofitable dead end upon closer inspection.

5 Reasons Why an Immediate Annuity Is Usually Not Recommended

Anyone who has a substantial amount of capital from an inheritance, a property sale, or a maturing life insurance policy is understandably looking for a straightforward retirement solution. The immediate annuity promises convenience, but frequently misses this mark for the following reasons:

1. The Illusion of Simplicity

The main argument for an immediate annuity is the supposed peace of mind. However, anyone trying to compare providers’ tariffs, cost structures, guaranteed pension periods, and profit-sharing allocations faces a highly complex thicket. For laypersons, a genuine market comparison without expert help is almost impossible to navigate – which directly contradicts the initially sought-after simplicity.

2. Poor Profitability and Inflation Risk

Even the best tariffs on the market yield a disappointing return compared to alternative retirement provisions. Because insurers are forced to invest extremely conservatively and deduct high distribution and administrative costs, little is left in the end. Furthermore, inflation poses a serious threat: If your immediate annuity remains nominally the same, it loses noticeable purchasing power year after year.

3. The Gamble on Living to a Biblical Age

The annuity factors are calculated in such a way that you must reach a statistically exceptional age just to see your own contributions returned as a total sum. If you pass away earlier, the insurance company benefits, while your wealth is lost to your family.

4. The Health Insurance Trap for Voluntarily Insured Individuals

An often overlooked but severe financial disadvantage affects people who are voluntarily insured in the statutory health insurance (GKV) scheme during retirement (e.g., former self-employed individuals or employees with higher incomes). They must pay the full health and long-term care insurance contributions on the private immediate annuity, which drastically reduces the already meager payout. For privately insured individuals, however, this makes no difference.

5. Rigid Structures Without Flexibility

Life rarely runs in a straight line. Whether it is sudden medical costs, a need to fund long-term care, or the desire for a major purchase – with an immediate annuity, your deposited capital is irrevocably locked away. You commit yourself unnecessarily for the rest of your life and completely relinquish control over your wealth.

Better and More Flexible Alternatives for Your Capital

If you do not want to hand your money over to an insurance company, modern, transparent, and significantly more profitable alternatives are available, which also allow you to generate an automated cash flow:

• Automated ETF Withdrawal Plan: You invest the capital in a broadly diversified, low-cost global equity ETF. Through an automated withdrawal plan with your bank (either partial capital consumption or purely interest surplus), you receive a fixed monthly amount into your checking account. This system is highly transparent, historically yields significantly better returns, and can be flexibly adjusted or stopped at any time.
• Dividend Strategy: By making targeted investments in high-dividend ETFs or a basket of quality stocks, you secure regular distributions that flow as an additional pension, while the core substance of the assets remains untouched.
• The Fixed-Term Deposit Ladder: For the strictly safety-oriented portion of the capital, splitting it into fixed-term deposits with staggered maturities (e.g., 1 to 5 years) is a viable option. This allows you to benefit from guaranteed interest and receive capital back on a regular schedule.

The Investment Property: Protection, Inheritance, and Real Cash Flow

Without a costly special agreement, your descendants will get nothing from an immediate annuity. A far better alternative is a buy-to-let property. Unlike a classic immediate annuity, you can pass this asset on to your heirs in its entirety.

Consider the amount you would put into an immediate annuity as equity for purchasing a property instead.

This lump sum can finance the entire investment property if it covers the ancillary purchasing costs of approximately 5–9 percent of the purchase price.

Once the investment property is purchased, rental income flows from day one – just like a pension. If the property is partially financed via a mortgage, your tenant pays the interest and principal.

The higher the invested amount, the higher the monthly pension (rental income). With an investment property, you can kill two birds with one stone:

• You receive a predictable lifetime supplementary pension through rental income.
• You can pass the apartment on to your descendants in its entirety.

In addition: The cash flow – meaning the monthly income minus all expenses – can often be positive from day one with investment properties.

This means you are already generating a small monthly surplus while the property is still being paid off by your tenant.

In contrast to an immediate annuity, this monthly return never dries up. As long as the property is rented, it generates returns; even far beyond your death.

You can easily leave a property to your descendants. This way, your children receive a fully paid-off property and are secured for the future.

Real estate offers interesting tax structuring options, particularly regarding inheritance and gifts, e.g., tax exemption after the expiry of the so-called “speculation period” of 10 years (and even after a single day).

In addition to tax advantages, a property offers protection against inflation. While the value of money decreases, properties and rental income increase in value over the long term.

Real estate is an excellent alternative to an immediate annuity, especially if the wealth is intended to be inherited one day.

Conclusion: The Smart Mix Does It

Instead of irrevocably transferring your capital to an insurance company, a modern, crisis-proof retirement relies on maximum flexibility, transparency, and tangible assets.

The optimal solution lies in a clever combination: Use an investment property managed by a service provider to generate an inflation-protected, inheritable baseline cash flow without any administrative effort on your part, and combine it with flexible, transparent investment products such as ETFs or liquid reserves. This way, you retain full control over your wealth at all times.

We would be happy to show you your options for building wealth with real estate, optimally securing it for retirement, and remaining flexible at the same time in a personal consultation.