Flexible Premium Annuity

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Definition - What does Flexible Premium Annuity mean?

A flexible premium annuity is a retirement plan that allows the insured to choose the mode of payment for their premiums and their retirement income. This flexibility allows annuitants to exempt themselves from paying taxes on their premium payments.

Insuranceopedia explains Flexible Premium Annuity

These annuities are called flexible because the annuitant can choose how they pay their premium, whether it's monthly, quarterly, annually, or in a lump sum. Likewise, when the annuitant monetizes the policy after retirement, they can choose from monthly, quarterly, or annual disbursement.

One of the advantages of the flexible premium annuity is that the premium payments are tax-deferred. In other words, the annuitant does not pay taxes on the premiums when they are paid but, instead, pays taxes on the funds once they are withdrawn.


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