How Do Flexible and Single Premium Deferred Annuities Compare?

If you are looking at single premium deferred annuity options as well as flexible payment options, you have several things to consider. Here are a few things to think about when choosing between flexible and single premium deferred annuities.

Flexible Deferred Annuity

With a flexible deferred annuity, you will be able to make regular payments towards the purchase of an annuity contract. With this type of arrangement, you will typically be required to make a minimum investment. You are then able to contribute more money to the annuity as you can afford it. This method is often preferred by people saving for retirement during their working years.

Single Premium Deferred Annuity

With a single premium deferred annuity, the payment works a little bit differently. With this type of annuity, you are going to take a lump sum of money and give it to the insurance company. The insurance company will then give you the regular annuity payments just as they would if you had paid for the annuity over a long period. 

Investment Considerations

Many people have a psychological barrier when it comes to handing an insurance company a lump sum of hundreds of thousands of dollars of their retirement money for an annuity. For this reason, many people prefer to pay small amounts of money as they go with a flexible payment schedule.

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