Two payout structures are defined with annuities immediate payout and deferred payout. An immediate annuity payout usually involves income payment process that start no later than one year after the premium is paid. Usually, the premium payment is in one instalment. Immediate annuities provide a way for older people to have a guaranteed income for life that can be accessed by them in the short-term.
Deferred annuities are exactly opposite and have income payments that often begin many years after the premiums are paid. One advantage that deferred annuities have over the immediate annuities is that the annuity earnings are automatically re invested over the accumulation period. The earnings can also be withdrawn early and the investors who have more time before their retirement can reap the benefits of these automatic re-investments of earnings. These earnings can also be withdrawn early up to a certain amount with deferred annuities.