Which type of annuity begins payout at some time in the future?

Deferred annuities are designed to begin making payouts at a specified future date rather than immediately after the investment is made. This feature allows the account holder to accumulate funds over a period of time before they start receiving payments. Individuals often choose deferred annuities for various reasons, including the desire to build a retirement fund that will provide income at a later stage in life.

During the accumulation phase, the funds grow tax-deferred, increasing the potential payout amount when the annuity eventually begins its distributions. This type of product is particularly useful for long-term financial planning, allowing individuals to tailor their retirement income strategy according to their future needs.

In contrast, other types of annuities, such as single premium immediate annuities, begin payments shortly after the initial investment, typically within one year. Life annuities provide payments for the lifetime of the annuitant, which can start immediately or be deferred. Temporary annuities provide payments for a specific period, but they may also begin payment right away. Therefore, the characteristic of deferring payouts to a later date is what distinctly defines deferred annuities.