What is the difference between immediate annuities and deferred annuities?

Annuities are insurance contracts that are designed to provide income for individuals over time. Immediate annuities and deferred annuities are two distinct types of annuity contracts. Immediate annuities are the simplest form of annuity and begin payments shortly after a lump sum is paid to an insurance company. The insurance company invests the money and then pays it out in installments, with the length of time and amount of the installment payments determined by the contract. Immediate annuities are typically used to generate a steady stream of income for retirees. Deferred annuities, on the other hand, are a type of annuity that allows individuals to defer annuity payments until a later date. With deferred annuities, the lump sum is invested by the insurance company but the payments are not made until some point in the future, typically at retirement age. As with immediate annuities, the amount and length of the annuity payments can be customized in the contract. The main difference between immediate and deferred annuities is when the payments begin. Immediate annuities start payments shortly after the Lump sum is paid to the insurance company, while deferred annuities delay payments until a later time.

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What is the difference between immediate annuities and deferred annuities?

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