Definition - What does Deferred Annuity mean?
A deferred annuity is an annuity wherein the policyholder receives payments at a specified future date after paying into the annuity for a number of years. In the context of insurance, many life insurance companies offer annuities on certain policies as an investment vehicle. These annuities can be used to supplement retirement income.
Insuranceopedia explains Deferred Annuity
The benefit of deferred annuities is that they can provide a reliable and scheduled source of income at a future date. This is particularly of benefit for the elderly who may not be able to work anymore. The downside is that the requirement to pay into them during the savings period for a long time. However, this is not a concern for people who purchase life insurance to plan for their future financial situations. Many life insurance companies offer annuities among a number of different types of investment options for life insurance policies.
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