payouts, as well as the desire by investors to take advantage of any potential tax-deferred growth.
This is combination of an immediate and deferred annuity. This approach provides for a portion of the annuity to revert back to the owner as immediate income for a fixed period of time, or for life. The remaining money in the annuity grows tax-deferred, as a regular deferred annuity would. Split-funded annuities act as a good hedge against inflation since the deferred portion can be used in the future as additional income, if necessary.
As the name implies, flexible-premium annuities are those in which the annuity owner has discretion over when the premium payments begin. The owner may also decide if, when, and how much the pre- mium payments may change; they may also decide to stop paying the annuity’s premium. This type of annuity is only for deferred contracts.
These annuities are purchased with one lump-sum payment, rather than premiums over time. The premium may be paid just prior to the annuity’s payouts (for an immediate annuity), or it may be paid much earlier (for a deferred annuity). Both single-premium immediate and single-premium deferred annuities may be paid out in fixed or vari- able amounts.
Individual annuities have two different phases: the accumulation phase and the distribution phase.
The annuity owner pays premiums and the contract value grows due to the premiums during the accumulation phase. There is no tax