Delayed Annuity

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DEFINITION of 'Delayed Annuity'

An annuity in which the first payment is paid at a later date in the future. A delayed annuity, similar to a regular annuity consists of a stream of cash flows provided to the annuity holder. However, cash payments do not begin to flow immediately, instead following a predetermined future schedule.

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BREAKING DOWN 'Delayed Annuity'

If Steve was to receive five yearly payments of $100 at the end of each year starting this year, then this payout would be considered an ordinary annuity. On the other hand, if the five payments are deferred for 10 years, this instrument is classified as a delayed annuity. In order to determine the net present value of the delayed annuity, the payments must be discounted to year zero (the present).

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RELATED FAQS
  1. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  2. How are non-qualified variable annuities taxed?

    Non-qualified variable annuities are tax-deferred investment vehicles with a unique tax structure. After-tax money is deposited ... Read Full Answer >>
  3. Can a variable annuity be rolled into an IRA?

    You can roll qualified variable annuities, such as other qualified retirement plan accounts, into a traditional IRA. Non-qualified ... Read Full Answer >>
  4. Are variable annuities subject to required minimum distribution (RMD)?

    Variable annuities are insurance contracts that provide tax-deferred growth of assets that can later generate a guaranteed ... Read Full Answer >>
  5. For what types of financial instruments would I want to calculate the present value ...

    Because the present value of an annuity formula relies on a consistent interest rate and identical payments for a set period ... Read Full Answer >>
  6. What exact information is included in the interest rate when calculating the present ...

    When calculating the present value of an annuity, the interest rate percentage is the rate at which future payments are discounted ... Read Full Answer >>

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