By LIZ WESTON of NerdWallet

An immediate annuity is an insurance product that provides guaranteed income: You give an insurer a chunk of money, and the company gives you a stream of payments that can last for life. The payments begin within 12 months of purchase.

Now may be a good time for retirees to buy an immediate annuity, since payouts are the highest they've been in a decade, says Rob Williams, managing director of wealth management at Charles Schwab.

But buying an immediate annuity __ also known as an income annuity or a fixed immediate annuity __ is effectively irreversible, so you'll want to choose carefully.

WHY YOU MIGHT WANT TO CONSIDER AN IMMEDIATE ANNUITY

One of the big risks in retirement is outliving your savings. Having enough guaranteed income to cover basic expenses can give you assurance that you'll keep a roof over your head and food in the fridge, no matter what.

A major source of guaranteed income is Social Security, and some people still have traditional pensions. If you don't have enough guaranteed income to cover essential living costs, though, an immediate annuity could fill in the gap, says Wade Pfau, author of "Retirement Planning Guidebook."

But immediate annuities shouldn't be an "all or nothing" solution, Pfau says. Ideally, you also would have money invested in stocks for growth, as well as cash reserves for emergencies.

Immediate annuities can help you ride out down markets, Williams notes. The steady stream of income could help you avoid selling investments to meet living expenses, he says.

HOW MUCH YOU CAN GET FROM AN IMMEDIATE ANNUITY

There are many types of annuities, and some are mind-bendingly complex. By contrast, immediate annuities are relatively straightforward: Your payout depends largely on how much you invest, your age, prevailing interest rates and the payout option you choose.

For example, a man and woman age 65 who invest $100,000 can expect a monthly check of about $535 if they choose the joint life option, where the payment continues for both lifetimes, according to Charles Schwab's annuity income estimator. If they choose a cash refund option, the monthly check drops to about $532, but their heirs will receive any money left over if the couple dies before getting back their original investment.

That's a relatively cheap form of insurance and could provide some reassurance to people who worry the insurance company will "win" if they die early, Williams says.

Payouts also depend on the insurer. According to the online marketplace ImmediateAnnuities.com, monthly checks for the couple could range from $513 to $565 a month for the joint life option, depending on the company.

Some companies sell annuities with cost-of-living adjustments in each subsequent year, but initial payouts are much smaller. For our hypothetical couple, a 3% annual inflation adjustment would result in payouts ranging from $359 to $379 to start, according to ImmediateAnnuities.com.

Inflation protection may be unnecessary if retirees have Social Security, which is inflation-adjusted, and investments in stocks, which deliver inflation- beating returns over time, Pfau says.