A Deferred Income Annuity helps to address longevity risk over a fixed period or the lifetimes of one or more individuals. A DIA is sometimes known as a guaranteed future income annuity, or secured future income annuity.
You can buy a deferred income annuity today with a lump sum payment, or you can contribute flexible premium payments over time to build a stream of guaranteed lifetime income that starts in the future, when you need it to, at a pre-determined future date. So you could buy a DIA now and have income start in 5 years, 10 years, and so on, or at a specific age when you want annuity payments to begin.
The minimum deferral period varies from 13 months to 2 years depending on the life insurance company that issues the DIA.
The maximum deferral period varies by the life insurance company issuing the DIA and source of funds, but it generally ranges from 13 months to 40 years. The longer you defer the higher your benefit when payments begin.
Ages 68-69, depending on issuing company for qualified funds. Ages 80-83 for a QLAC and ages 80-93 for non qualified depending on insurance company
Typically the minimum is $10,000. But may vary by company.
A Qualified Longevity Annuity Contract (QLAC) allows income to begin past the required minimum distribution (RMD) age of 70 ½ for qualified retirement plans. They are subject to premium limitations. A Deferred income Annuity can be used as a QLAC.
Income is taxed depending on the source of funds
A structured settlement annuity can include a deferred income annuity type cash flow, as well as other types of cash flows in the same annuity contract. You would need to assemble multiple annuity contracts of different types to accomplish what a structured settlement annuity can do with a single contract. A structured settlement annuity is a qualified funding asset used the settlement of legal claims or litigation, while a deferred income annuity is primarily used for retirement.
Last updated January 19, 2024
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