This type of annuity is not appropriate for a husband and wife since at the death of the first spouse income payments cease. The monthly benefit is greater than with other annuities since income payments cease at the first death. Under a deferred annuity, premiums paid accumulate, earning interest, and installment payments are deferred until some future date. When annuity benefits commence, the accumulated value is used to purchase the annuity benefits you selected. Most deferred annuities provide the same annuity payment options as are available with single premium immediate annuities.
Deferred annuities are available on a single premium or flexible premium basis.
Interest is credited to the accumulation value from the date that the premium payment is received until the earliest of the retirement date, the annuitant's death or the date that funds are withdrawn. If the annuitant dies on or before the retirement date and no annuity payments have been made, the company will pay the accumulated value as of the date of death. The contract also gives the option to withdraw the cash value before commencement of annuity payments. Cash withdrawals are usually subject to a surrender charge in order to recover expense costs. In addition, some contracts, especially single premium deferred annuities, will waive all surrender charges if the credited interest rate falls below a particular rate commonly known as the bail-out rate.