Deferred Payment Annuity

AAA

DEFINITION of 'Deferred Payment Annuity'

An annuity where the payments received will start some time in the future, as opposed to starting when the annuity is initiated. An annuity is a financial contract that allows the buyer to make a lump-sum payment, or a series of payments, in exchange for receiving future periodic disbursements. A deferred payment annuity allows the investment to grow both by contributions and interest before payments start coming back. Also known as a deferred annuity.

INVESTOPEDIA EXPLAINS 'Deferred Payment Annuity'

Deferred payment annuities typically offer tax-deferred growth at a fixed or variable rate of return, just like regular annuities. Often deferred payment annuities are purchased for under-age children, with the benefit payments postponed until they reach a certain age. Deferred payment annuities can be helpful in retirement planning.

VIDEO

RELATED TERMS
  1. Annuity

    A financial product sold by financial institutions that is designed ...
  2. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  3. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  4. Immediate Payment Annuity

    An annuity contract that is purchased with a single lump-sum ...
  5. Ordinary Annuity

    A series of equal payments made at the end of each period over ...
  6. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
Related Articles
  1. Watch Your Back In The Annuity Game
    Home & Auto

    Watch Your Back In The Annuity Game

  2. Guaranteed Retirement Income In Any ...
    Retirement

    Guaranteed Retirement Income In Any ...

  3. An Overview Of Annuities
    Home & Auto

    An Overview Of Annuities

  4. Annuities: How To Find The Right One ...
    Retirement

    Annuities: How To Find The Right One ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center