What is a common funding method for deferred annuities?

A common funding method for deferred annuities involves both single premium payments and periodic premium payments. This flexibility allows individuals to fund their annuity accounts in a way that best suits their financial situation and goals.

Single premium payments involve making one lump-sum payment at the inception of the annuity, providing immediate capital that will grow tax-deferred until withdrawals begin later in life. This method is particularly appealing to those who may have received a windfall, such as an inheritance or a settlement, and wish to invest that money for future income.

Periodic premium payments, on the other hand, allow individuals to contribute smaller amounts over time, which can be especially beneficial for those who want to build their savings gradually. This might include monthly, quarterly, or annual payments that accumulate in the annuity over several years.

By incorporating both methods, deferred annuities cater to a wider range of financial strategies and preferences, making them more accessible and appealing to a diverse group of investors. The combination of these funding options facilitates flexibility in planning for retirement or other long-term financial goals.