Immediate, deferred, fixed, and variable annuities each work differently, and comparing them helps you find the structure that suits your finances.
Annuities typically come in several forms, giving people flexibility in how they invest their money and collect their payments. Different financial companies may offer a variety of annuity options carrying one or more traits, including immediate, deferred, fixed, and variable.
Depending on the annuity, several types and differing factors can come into play. We can help you weigh these annuity types and variables against one another to find the option that best matches your needs and financial circumstances.
When an annuity is labeled "immediate," it can reach its payout—or begin paying right away—once the investor funds it. This type is most often chosen when someone receives a lump sum (from a lottery win, for example) and wants to fund the annuity and start collecting payments straight away. The payment amount is mainly set by how much is contributed and the chosen length of time, which can be as short as five years.
Annuities described as "deferred" carry a surrender period, letting investors contribute payments to fund them up until the selected maturity date. Once the surrender period ends, the annuity can enter annuitization and start making payments much like an immediate plan. The amount is largely governed by how much has been funded and the chosen length of the payment window, which may be for a set term or continue until the beneficiary passes away.
A fixed annuity may be either immediate or deferred, but it will eventually arrive at the payout phase where the investor receives money. When the payment structure is "fixed," the investor collects regular payments throughout the duration of that phase. These payments are typically calculated using a rate comparable to the contributions that were made.
Much like fixed annuities, variable annuities can be either immediate or deferred and will eventually reach a payout. Variable annuities deliver a payment structure that shifts based on the participant's contributions and on rates that move according to the performance of a selected investment portfolio held within the annuity. These annuities tend to carry more risk and may pay out less or more depending on various conditions, such as the portfolio's economic growth and stability.
Quottes partners with top-rated insurance companies that provide a range of financial products, including several kinds of annuities. We offer outstanding customer service and unbiased advice so people can make well-informed decisions. Keep scrolling through our website or call 941-894-6460 for more information.
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