What Are Single Premium Deferred Annuities?

Retirement can last for an unknown period of time, and often the amount of money saved for it is not enough. Annuities insure that you continue to have income after you have outlived your retirement savings. Their guaranteed income for life or a certain period can also help you manage unexpected losses in your IRA.

Identification

Single premium deferred annuities are annuities that are funded with one premium, or payment, rather than a series of premiums. The premium is paid in and allowed to grow over the deferral period. Once the annuity matures, a guaranteed income is paid out each month based on the illustration and guidelines for the policy. Growth of the premium will depend on the type of annuity and the performance of any underlying investments.

Time Frame

Because they are deferred, single premium deferred annuities do not annuitize for several years after the single premium is paid.

Types

Single premium deferred annuities can be purchased as straight life annuities which pay a guaranteed income for the life of the annuitant; or as period certain (also called term certain) which pay a guaranteed income for a certain period of time; or as joint and last survivor which pays a guaranteed income for the life of both annuitants.

Features

Single premium deferred annuities may have death benefits and guaranteed minimum income benefits built in.

Significance

Single premium deferred annuities help pre-retirees who aren't sure their current retirement savings will be enough to last them their entire retirement.

Misconceptions

While most single premium deferred annuities are qualified (or tax deferred) they are not always. Additionally, some may offer fixed growth and some may offer variable growth.

References

• Single Premium Deferred Annuties
• Deferred Annuities