Deferred Annuity

Deferred Annuity refers to an annuity contract that is designed to grow funds tax-deferred before being converted to a stream of income at a later date. The policyholder pays premiums into the IUL policy, a portion of which can be allocated towards the deferred annuity component.

The funds in this annuity are invested in a way that allows them to potentially grow with market performance while also offering protection from market downturns. This deferred accumulation allows the policyholder to benefit from compounding growth over time.

Once the policyholder decides to start receiving income, typically at retirement, the deferred annuity can be annuitised, providing a regular stream of payments.