What is the difference between immediate annuities and deferred annuities?

Immediate annuities and deferred annuities are both types of annuities that are offered in North Carolina. An annuity is a long-term financial product that gives the annuitant, or the person who purchases the annuity, a steady stream of income. Immediate annuities are purchased with a single lump sum of money, and start providing the annuitant with payments right away. The payments come from the insurance company and are based on the sum of money the annuitant purchased the annuity with (the premium), and the number of years the annuitant will receive payments (the term). Deferred annuities are also purchased with a single lump sum of money. The difference between deferred annuities and immediate annuities is that the annuitant doesn’t start receiving payments from the insurance company right away. Instead, the annuitant can choose to invest their money into a fund or account, and start receiving payments at some point in the future. The annuitant can also choose to give up some of their payments for a larger lump sum in the future. When deciding between an immediate annuity and a deferred annuity, the annuitant should consider their current financial situation and their long-term goals. Immediate annuities provide the annuitant with an immediate stream of income, while deferred annuities offer the potential of higher returns over the long-term.

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What is the difference between immediate annuities and deferred annuities?

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