Deferred annuities are a type of investment product that enables investor funds to grow tax-deferred for a set period of time. In this way, investors can get the most compound interest until the payout phase. Though most people opt to end their deferment after retirement, these annuities are fairly liquid and making partial or full withdrawals is a straightforward process.
Deferred annuities generally carry very low risk, as investor money is held by qualified life insurance companies that must adhere to rigorous financial regulations. There are several types of deferred annuities that have specific terms and conditions.
Fixed deferred annuities are backed by a guaranteed rate of return, while investments in variable deferred annuities behave more like mutual funds, with variable returns.
After investing in a longevity annuity, the annuity holder is promised lifelong future payouts, thus enabling the investor to secure a steady income after a certain age.