A deferred annuity is a investment vehicle sold by insurance companies which allows individuals to grow their savings on a tax deferred basis
. The eventual goal is to be able to distribute those savings through a stream of income back to the investor for the duration of their lifetime. The structure of how the income gets paid back to the investor has a time related component as well as an individual or joint individual time frame to be considered.
Deferred annuity is a modification of the theory of Florida annuity. An annuity is nothing but a usual payment that is expected by an individual regularly after retirement. A person can obtain a stream of income by investing a particular amount of funds that will then remain earning proceeds and produce the requisite amount at standard interval.
Thus a deferred annuity can be said to commence making payments to begin after a precise time period and this is generally after a definite number of years from the time the initial investment was implemented. This means that with a deferred annuity the investment may be made at the moment when a person is say 50-years-old and the disbursement could begin after a period of 10 years, or it could move toward after the individual retires. There is a period of time between the investment and the time that it accumulates. After the time it accumulates or the accumulation period, then the savings will be distributed as a stream of income payments or annuitization period.
One of the benefits of a deferred annuity is the ability for the investment to grow tax deferred Annuities. The earlier the investment is made and allowed to grow tax deferred, the greater the potential income stream will be at the time when with when the payment is to be received. This is a function of the fact that the longer the money grows in the accumulation phase period, will contribute to growing the accumulation value which will determine the size of the income payments during the annuitization phase.
A deferred annuity is in actuality used in real life for quite a lot of income planning. One scenario is when there is a desire to obtain a predictable payment at the time of retirement. Thus utilizing the benefits that the deferred Florida annuity offers, will be an integral part of ones retirement planning. In recent times, there was news regarding a plan to and make use of this notion in an effort to assist the retired citizens. Particularly there was a need to be able to bring into play this method of income disbursement in order to obtain a regular stream of income so that they dont outlive their investments. A new sort of deferred annuity, called the fixed indexed annuity (FIA) becomes known in 1995 which was in the beginning entitled as an Equity-Indexed Annuity.