Immediate vs. Deferred Annuities

Single Premium immediate annuity- (SPIA)

immediate annuity is bought with a lump-sum single payment and then becomes a form of regular distributed income.

Fixed Premium Deferred Annuity

Also known as retirement annuities. An annuity whose owner makes on-going, fixed and level premium deposits for specific amounts. These amounts can be annually, quarterly, monthly. Specific amount of retirement income.

Deferred Annuity Surrender Charges

7% during the first three years of contract. 6% during the fourth and fifth year 5% during sixth and seventh year. Once the surrender charge period has ended, no charges are imposed on future withdrawals or surrenders.

Deferred annuity death benefits

contract values are paid to the beneficiary.

Single premium deferred annuity- (SPDA)

purchased with a single lump-sum payment. this money will grow within the contract until the owner accesses it. No additional premium payments are accepted.

Deferred annuities

purchased with a single sum of money or periodic investments. The conversion of annuity payments is delayed until a further date. This means that during the deferral period, funds accumulate interest on a tax-deferred basis.

Immediate annuities

purchased with a single sum of money to immediately begin distributing periodic payments. The distribution of income begins after one payment of cycle once purchased. (first payment is received one month after purchase).

bailout provision

surrender charge-free withdrawals if the interest rate credited to the accumulated value drops below a specified level.

Flexible Premium Deferred Annuity

annuities that allow the owner to make premium deposits of any amount whenever they want. Minimum amount required and also an initial min. premium amount.