Deferred annuity features...

Deferred annuity features...

• A. Payments begin within one year of purchase
• B. Payments begin sometime after one year from the purchase date
• C. Payments begin the day after purchase
• D. Payments never begin

Answer: (B)

A deferred annuity is funded now but doesn’t pay out right away—the money grows during a deferral period before the first payment starts. This means the first annuity payout occurs sometime after the purchase date, typically after more than one year. That’s why the statement that payments begin sometime after one year captures the essence of a deferred annuity. If payments began within a year or the day after purchase, that would describe an immediate annuity, where payouts start soon after funding. Payments never beginning would not fit the product, since an annuity is designed to provide periodic payments.

A deferred annuity is funded now but doesn’t pay out right away—the money grows during a deferral period before the first payment starts. This means the first annuity payout occurs sometime after the purchase date, typically after more than one year. That’s why the statement that payments begin sometime after one year captures the essence of a deferred annuity. If payments began within a year or the day after purchase, that would describe an immediate annuity, where payouts start soon after funding. Payments never beginning would not fit the product, since an annuity is designed to provide periodic payments.