• Immediate annuities do provide guaranteed income, but they also come with certain risks.dollars image by Mikhail Olykainen from Fotolia.com
  
  Investors looking for a steady stream of income during their retirement years might consider taking out an immediate annuity. These annuities are contracts that you sign with insurance companies: You agree to pay the insurer a certain amount. The insurance company then pays you back, including interest, for either a specific number of years or for your entire life. Immediate annuities offer guaranteed income for life. But, as with any investment, there are risks.
  
  

Fees

• The biggest risk with an immediate annuity is that you may end up paying too much in fees, according to financial website Bankrate.com. These fees vary by insurer, but they do add up..
  
  Annuities might come with annual fees, monthly fees and mutual fund fees. In general, the simpler the annuity--such as a fixed immediate annuity with no riders--the fewer fees consumers will pay.
  
  Bankrate recommens that consumers evaluate many different annuities before signing up for one. Shopping around remains the best way to eliminate the risk of paying too much in fees.
  
  

Loss of Control

• When taking out immediate annuities, you must agree to honor a surrender period. During this time, which usually lasts from six to eight years, you will have to pay as much as 10 percent of your principal investment to withdraw your money, according to the MSN Money website. These fees are known as surrender charges. Some annuities also charge fees to investors who withdraw their money before the age of 59-and-a-half.
  
  After the surrender period ends, the account becomes annuitized. The insurance company now takes over ownership of the account. In exchange for this, you receive a regular check, usually once a month, from the insurance company.
  
  The risk here is that you might need the money you've placed in an annuity before the surrender period ends. You then face heavy fines.
  
  

The Insurance Company May Fail

• If the insurance company with which you take out an annuity fails, you run the risk of losing your entire investment. That's because there is no Federal Deposit Insurance Corporation rule that protects annuity investors in the event that their insurance company fails, according to Bankrate.com.