Immediate Annuities
Income begins shortly after you purchase the contract — generally suited to people who are at or near the point where they want income to start.
Deferred Annuities
Includes an accumulation phase before any income payments begin, during which the contract value may grow according to the crediting method (fixed rate, indexed crediting, etc.) before converting to income at a later date you choose.
Choosing Based on Your Timeline
The decision generally comes down to whether you need income now or are planning years ahead — deferred annuities can sometimes provide a larger eventual income payment than an immediate annuity purchased with the same premium today, due to continued growth and deferral credits some products offer.
Key Takeaways
- Immediate annuities start paying income soon after purchase; deferred annuities delay income to a future date.
- The accumulation phase of a deferred annuity allows for potential contract value growth before income begins.
- Your specific income timeline should drive which structure is appropriate.
Income amounts and growth credited during deferral vary by product and are not guaranteed beyond the contract's specific terms. Guarantees are backed by the claims-paying ability of the issuing insurance company.
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