Variable annuities fall into two broad categories, immediate and deferred annuities, depending upon when the annuity payout period begins. That is, each annuity is distinguished by how premiums are paid and when the benefits begin.
With an immediate annuity, the investor deposits a lump sum. Within 60 days, the insurance company will begin to pay the annuity benefits.
Types of deferred variable annuities include single-premium deferred and periodic-payment deferred.
- Single-Premium Deferred Annuities: When an investor deposits a single lump sum and the annuity benefits are deferred until a later date, the annuity is called a single-premium deferred annuity.
- Periodic-Payment Deferred Annuities: An annuity contract can allow an investor to make periodic payments on a scheduled basis, either monthly, quarterly or annually. The annuity pays out its benefits at a later date and is referred to as a periodic-payment deferred annuity.
Exam Tips and Tricks
You will need to know the types of variable annuities and what makes each one different. Remember there are two general types of annuities: immediate and deferred. From there, you can distinguish between the various types of each one.
Valuation of Variable Annuities
RetirementLearn more about why annuities are generally purchased and the way that they can positively and negatively affect an individual preparing for retirement.
Financial AdvisorAnnuities suffer from a few perception problems. This primer that covers the good, the bad and the ugly of annuities.
InvestingAnnuities are attractive because they can give you a stream of income, but they can be tricky to buy.
RetirementThese popular investments can provide a steady stream of income during your retirement years. Here are the details.
RetirementFixed, variable and indexed annuities offer different features. Find out which one fits your needs.
Financial AdvisorAnnuities are safe and often appealing, but IRAs and 401(k)s offer advantages that annuities typically can’t match, with little additional risk.
RetirementAnnuities guarantee some degree of fixed income in retirement. But is the security worth the fees and less favorable tax treatment? How to decide.
RetirementThese investments can provide extra income after you retire. Here’s a guide to when and how you will receive the payout.
RetirementFind out how to get the upper hand when dealing with this payout challenge.
Financial AdvisorAnnuities can be an enticing option as Americans near retirement, but there are several reasons to be wary of them.