Deferred Annuity

Definition

• An annuity contract that give the annuitant the option to delay receiving income payments until he or she chooses to receive them. There are two main phases in a deferred annuity: the accumulation phase where the annuitant pays into the annuity and income phase where the annuity is paid back to the annuitant in the form of income payments. Also known as a "deferred payment annuity" or "delayed annuity."

Synonyms
postponed annuity

Related Terms and Acronyms

• Accumulation Period (AP) — Acronym, Important,
  • The period where an investor continues to put money into his or her investment(s).
• Annuity — Definition,
  • A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
  • A financial instrument that disperses a number of payments over a set period of time.
• Annuity Contract — Definition,
  • A contract that outlines each party's responsibilities as they relate to an annuity.
• Fixed Annuity — Definition,
  • An annuity that makes fixed payments to the annuitant with guarantees for earnings and principal.
• Immediate Payment Annuity — Definition,
  • An annuity where payments to the annuitant start immediately after the annuity has been set up.
• Indexed Annuity — Definition,
  • An annuity where investment performance is pegged to a stock index.
• Inflation-Protected Annuity — Definition,
  • An annuity that guarantees a return equal to or above inflation.
• Investment in the Contract — Definition,
  • The principal that has been contributed to an annuity.
• Joint and Survivor Annuity — Definition,
  • An annuity with multiple annuitants (usually spouses) that makes payments as long as either of the annuitants are alive.
• Life Expectancy Method — Definition,
  • A method of calculating the appropriate size of payments in an annuity's income phase by estimating the annuitant's life expectancy.
• Payout Phase — Definition,
  • The phase of a deferred annuity where the annuity begins to make payments to the annuitant.
• Registered Retirement Savings Plan (RRSP) — Acronym, Canada, Very Important,
  • A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
  ➥ Tax deferred investment contribution used to reduce income tax.
• Single Premium Deferred Annuity (SPDA) — Acronym,
  • A deferred annuity funded with a single payment.
• Split-Funded Annuity — Definition,
  • Two annuities purchased together, one with a deferred payout and the other with an immediate payout.
• Straight Life Annuity — Definition,
  • An annuity that stops all payments upon the annuitant's death.
• Tax Deferred Annuity (TDA) — Acronym, Important,
  • A type of annuity where taxes are deferred until the annuitant decides to withdraw money from the annuity.
  ➥ More commonly known as a Tax Sheltered Annuity (TSA).
• Wraparound Annuity — Definition,
  • An annuity that allows the annuitant to control how funds in the annuity are invested.