how deferred annuities work
there are three basic types of deferred annuities fixed indexed and variable 2 as their name implies fixed annuities promise a specific guaranteed rate of return on the money in the account indexed annuities provide a return that is based on the performance of a particular market index such as the s p 500 the return on variable annuities is based on the performance of a portfolio of mutual funds or sub accounts chosen by the annuity owner all three types of deferred annuities grow on a tax deferred basis 2the period when the investor is paying into the annuity is known as the accumulation phase or savings phase once the investor elects to start receiving income the payout phase or income phase begins many deferred annuities are structured to provide income for the rest of the owner s life and sometimes for their spouse s life as well before purchasing an annuity buyers should make sure they have enough money in a liquid emergency fund 