What are the differences between immediate and deferred annuities

With an immediate annuity, income payments start no later than one year after you pay the premium. You usually pay for an immediate annuity with one payment.

The income payments from a deferred annuity often start many years later. A deferred annuity has two parts or periods. During the first period - the accumulation period - the money you put into the annuity, less any applicable charges, earns interest. The earnings grow tax deferred as long as you leave them in the annuity. In some annuity contracts there is a second period, called the payout period, the company pays income to you or to someone you choose.

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