An annuity that defers payments to the annuitant until a (usually unspecified) later date. Deferred annuities typically pay interest on the cash buildup inside the annuity, based on one of several crediting formulas.
Popular interest crediting formulas include:
- Fixed rate
- Current market rate (adjustable)
- Variable rate
- Indexed rate (based on a call spread strategy employed by the insurance company, linked to the upward movement of a major stock market index)