Deferred annuity

Deferred annuity,

Definition of Deferred annuity:

  1. There are three basic types of deferred annuities: fixed, indexed, and variable. As their name implies, fixed annuities promise a specific, guaranteed rate of return on the money in the account. Indexed annuities provide a return that is based on the performance of a particular market index, such as the S&P 500. The return on variable annuities is based on the performance of a portfolio of mutual funds, or sub-accounts, chosen by the annuity owner.

  2. An annuity which commences only after a lapse of some specified time after the final purchase premium has been paid.

  3. Annuity in which payback does not start until a specified time in the future, such as after a certain number of years from the annuity contract date, or at a certain age of the annuitant or the beneficiary.

  4. A deferred annuity is a contract with an insurance company that promises to pay the owner a regular income, or a lump sum, at some future date. Investors often use deferred annuities to supplement their other retirement income, such as Social Security. Deferred annuities differ from immediate annuities, which begin making payments right away.

How to use Deferred annuity in a sentence?

  1. Generally speaking, there are two primary ways annuities are constructed and used by investors: immediate annuities and deferred annuities.
  2. A deferred annuity is an insurance contract that promises to pay the buyer a regular income or a lump sum of money at some date in the future. Immediate annuities, by contrast, start paying right away.
  3. Withdrawals from a deferred annuity may be subject to surrender charges as well as a 10% tax penalty if the owner is under age 59½.
  4. Deferred annuities come in several different types—fixed, indexed, and variable—which determine how their rate of return is computed.

Meaning of Deferred annuity & Deferred annuity Definition