How Does A Deferred Annuity Work?
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaAn annuity is a contract guaranteed by an insurance company that provides a stream of monthly payments for as long as the annuitant or another person remains alive. Immediate annuities start right away with the receipt of a sum of money. Deferred annuities start later and offer an opportunity to deposit additional money into the plan. There are significant tax advantages in these plans.Answered on August 7, 2014flag this answer
21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasThat is a great question! There are two basic types of annuities, immediate and deferred. With an immediate annuity, you plunk down a large sum of money, and in a very short period of time, the sum is "annuitized", or broken into a series of continual payments. With a deferred annuity, the annuitization phase of your contract is put off (or deferred) for a number of years, to increase its value before it begins to make its series of payments. There are penalties for taking the money out before the agreed upon number of years in the accumulation phase (the deferred period) has passed, so it is wise fort you to have discussed this with your agent before you purchased the annuity. These are very popular, as there are some really good growth strategies out there. Thanks for asking!Answered on August 8, 2014flag this answer
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