Industry News

Deferred Fixed Annuities: Security, Safety, Steady Growth

These insurance contracts, while paying credited interest rates at all-time lows, are about the best savings vehicles going right now.  And, when you consider the long-term, they might be the savings plan of choice even during times of high market returns because of their attributes as a retirement strategy.  After all, deferred annuities were originally created to help people save for retirement.

Deferred fixed annuities are like the “Little Engine that Could”.  They keep chugging along no matter what the equities markets are doing. 

The definition of “annuity” is “a stream of income that cannot be outlived”. 

The word “deferred” should be used when selling annuities if that stream of income is not going to be taken immediately. 

“Fixed” means that there is a guaranteed credited interest rate associated with a deferred’s annuity account value and that principal in the account (total of all premiums paid in) is guaranteed by the financial strength of insurance company backing the policy.  However, the word “fixed” is a bit misleading because it sounds like nothing is happening.  In fact, a “current” credited interest rate is what is actually credited to the account value – it fluctuates with the interest rate market and is usually higher than the guaranteed credited interest rate.

Financial pundits who have hardly ever even mentioned deferred fixed annuities as a savings option are suddenly talking about them because of their safety (guarantees) and the tax-deferred growth of the account value.  Investors are increasingly seeking some way to keep at least some of their principal savings and/or retirement money from losing value as their 401(k) has become a “201(lk)”

Deferred fixed annuities come in two types:  a) single-premium deferred annuity (SPDA), and b) flexible-premium deferred annuity (FPDA).  SPDAs only accept a single deposit of money whereas the FPDA is designed to accept payments over time.  Deferred fixed annuities consist of either “qualified” money (money that has not been taxed) or “non-qualified” money (money that has been taxed).  The two cannot be mixed within the same deferred fixed annuity contract.

The Designs In Life website has a large section of information, instruction, and resources for you to access.  After registering, log in, and go to the “Solution Center”.  On the right-hand side-bar of the page that comes up, click on “Annuities” and feel free to browse.

If you want to get started right away and have prospects or clients that need to move money into an annuity immediately, call me so that you don’t lose the business to a bank or another agent.  (It happens all the time!)


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