Money Skoop » fixed annuity http://www.moneyskoop.com Get the "skoop" on managing your money and put it to work for you! Mon, 31 Oct 2011 16:50:34 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 The Differences Between Deferred And Immediate Annuities http://www.moneyskoop.com/the-differences-between-deferred-and-immediate-annuities/ http://www.moneyskoop.com/the-differences-between-deferred-and-immediate-annuities/#comments Sat, 30 Jan 2010 00:27:17 +0000 admin http://www.moneyskoop.com/?p=131 In an effort of investor education, it is important to understand some of the key distinctions between the various financial and insurance products available on the market. One such distinction comes by way of the annuity contracts. All annuity contracts come in one of two different types: deferred or immediate. The fixed deferred annuity is probably the most popular in terms of retirement or financial planning. This annuity is designed to provide the investor a fixed income for a prearranged time period, and defers these payments until a date into the future. This deferred date is where the name stems from. This can allow the investor the ability to postpone payments or grow the account until they are ready or able to take distributions. The uses for this type of arrangement can be numerous.

On the other hand, fixed immediate annuities are designed to begin distribution payments to the designated beneficiaries immediately. The definition of immediate in these contracts is defined as one period after the contract is created. The period is determined by the type of annuity contract. If the annuity is structured to provide monthly payments, then the payments would begin one month after the start of the contract. If the contact was structured to provide an annual payment, then the first payment would be one year from the start date of the contract.

Determining which annuity type you need is completely dependent upon how you intend to use the contract. As stated before, many retirement plans call for a deferred annuity contract, and will postpone distributions and grow the account in the interim. An immediate annuity is most often used when lump sum payment is used and then the distributions are allocated for use as income or payments for another product type. Whichever type you choose, make sure it matches your unique situation and goals for the future.

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