Deferred annuities are funded by either a single deposit or a series of deposits, and has two distinct phases: the 'deferral' phase, during, which time your money can accumulate on a tax-deferred basis, and the 'income' phase, when your contract values are converted into a stream of income.
Deferred annuities may be appropriate if you want to:
- set aside money that can be used to provide a stream of income after you retire.
- save for retirement gradually, without contribution limits and accumulate funds on a tax-deferred basis.
- secure a guaranteed income that you will begin receiving at some point in the future.
There are two basic types of deferred annuity options — fixed annuity and variable.
A deferred fixed annuity has a rate of return that is set and guaranteed for a specific time by the insurance company. This type of annuity may appeal to you if you have a more conservative approach to retirement or are looking for a vehicle to serve as a conservative portion of your retirement portfolio.
Features of a deferred fixed annuity:
- Tax-deferred growth
- Fixed interest rate, with safety of principal
- Death benefit for your beneficiaries
A deferred variable annuity is a long-term investment that has a rate of return based on investments you choose. Variable annuities typically offer numerous investment options, can help diversify a retirement portfolio, and can be allocated according to your risk tolerance level. The performance of variable funds is not guaranteed and can fluctuate.
Features of a deferred variable annuity:
- Tax-deferred growth
- Professional fund management and asset diversification
- Tax-free transfers between investment options
- Death benefit for your beneficiaries
Because variable annuities are investment products, they are sold by prospectus, which will be provided to you by your financial representative.
Learn more about annuities.
NMFN-ANN-006 (0611)