What is a flexible premium deferred variable annuity?
Similarly, what is a flexible premium variable annuity?
A flexible premium variable annuity is a contract between an individual and an insurance company that is intended to be a long-term investment to generate income for retirement. It has numerous options that can be tailored to each investor's unique needs and also has the potential for growth.
Secondly, what is a deferred variable annuity? A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Compare that to a fixed annuity, which provides a guaranteed payout.
Consequently, which is a disadvantage to a flexible premium annuity?
The annuity company may limit contributions during the accumulation phase, when the money in the annuity is growing with interest. Aggressive investors may not reach their goal if their annuity has a contribution cap. Also, your annuity's growth requires consistent payments.
What are the benefits of a deferred annuity?
Save more now, pay fewer taxes later Regardless of which type of annuity—or what mix of annuities—is best for a client, these products offer a big advantage for investors: All income that a deferred annuity earns during the accumulation phase is tax deferred: The funds grow tax-free until they are withdrawn.