Annuities are most caring friends that help people at their old age. Annuities are vehicles to protect funds for retirement years to live a relaxed and easy life. There are many types of annuities that offer different features to their holders. Deferred annuities are one of most popular retirement tools that help to accumulate funds until a future point of time when you will necessitate it. Deferred annuities are long term investments that provide stable income payments after your retirement.

Deferred annuity can be defined as, “A type of annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them. This type of annuity has two main phases, the savings phase in which you invest money into the account, and the income phase in which the plan is converted into an annuity and payments are received. A deferred annuity can be either variable or fixed.”

Normally there are two types of deferred annuities- fixed deferred annuities and variable deferred annuities. You can purchase fixed deferred annuity through lump sum payment or via periodic payments. Fixed deferred annuities offer an assured income for a specific period of time and also give assurance of return of principal amount. Earnings of these annuities grow tax deferred until you start to take out money from annuity fund.

By purchasing variable deferred annuities, annuitants get option to invest in stocks and bonds and can earn higher income than fixed interest rate. Return of variable deferred annuities is not guaranteed. With the variable deferred annuity you can transfer funds among the various investment choices without paying any tax. Accumulation and distribution stage are two phases of deferred annuities. During the accumulation phase annuitant contribute funds and at distribution stage funds are paid back to annuitant on basis of payment option selected by him/her.

For any help regarding deferred annuities, click here or call an Annuity Specialist at AnnuityForLife.com, 1-888-261-6237