How Does A Deferred Annuity Work? 
That is a great question ! There are two basic types of annuities , immediate and deferred . With an immediate annuity , you plunk down a large sum of money , and in a very short period of time , the sum is `` annuitized '' , or broken into a series of continual payments . With a deferred annuity , the annuitization phase of your contract is put off -LRB- or deferred -RRB- for a number of years , to increase its value before it begins to make its series of payments . There are penalties for taking the money out before the agreed upon number of years in the accumulation phase -LRB- the deferred period -RRB- has passed , so it is wise fort you to have discussed this with your agent before you purchased the annuity . These are very popular , as there are some really good growth strategies out there . Thanks for asking ! 