Purpose of a deferred annuity.
A deferred annuity is designed primarily for long-term accumulation, most commonly for retirement income planning.
Two phases of a deferred annuity.
Accumulation period: Premiums are paid and interest accumulates on a tax-deferred basis.
Annuity (payout) period: Income payments begin.
Timing of income benefits.
Unlike immediate annuities, deferred annuities are intended to begin income at a future date chosen by the owner, often many years later (e.g., at retirement age).
Evaluate each option.
A. Upon death
Incorrect. Death benefits may be paid, but this is not the intent of income benefits.
B. Upon beneficiary request
Incorrect. Beneficiaries receive death benefits, not scheduled annuity income.
C. Within several weeks
This describes immediate annuities, not deferred annuities.
D. On a specified date often years after issuance
Correct. This reflects the core purpose of a deferred annuity.
Maryland suitability relevance.
Maryland requires producers to recommend annuities consistent with the consumer’s time horizon and income needs, which is why deferred annuities are matched to future income goals.
Conclusion.
Deferred annuity income is intended to begin on a specified future date, often years later.
