What Is The Difference Between Immediate Annuities And Deferred Annuities?

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Hi there, Stan the Annuity Man, America's annuity agent licensed in all 50 states,

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sporting the I Heart Lifetime Income shirt, which is a fan favorite. When I walk through the airport

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with my shades on, my hat, the whole thing, you know, I've got Adidas sweats on with the logo,

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logoed out. I even have Adidas shoes with the word annuity man imprinted on them. I mean, I go

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nothing in moderation. Big C behind the camera. So the question today is,

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what's the difference between an immediate annuity and a deferred annuity? And

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I know what you're saying, Stan, be nice. Please be nice. Don't be negative. You know, glass

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half full. I'm going to be glass half full on this topic and add a little nuance to it after this.

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Alright, so, what's the difference between an immediate annuity and a deferred annuity? One's

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immediate, one's deferred. No, I'm kidding. All kidding aside. When we're looking for lifetime

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income, you know, I ask two questions. What do you want the money to contractually do? When do

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you want those contractual guarantees to start? So if your answer is, I want the money to

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start as soon as possible, that's a single premium immediate annuity, and that income can start as

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soon as 30 days from when the policy's issued. Okay? So that's immediate income. It's going to

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pay for as long as you live. We can structure it a myriad of ways. Most people like to do it

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one of two. Well, I'm going to talk about three ways, but the two most popular

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is life with cash refund and life with installment refund, or joint life with cash refund, joint life

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with installment refund. What that means is as long as you're breathing, or joint, one of you

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is breathing, it's going to pay. What if I live to 150? It's going to pay. What if I live to 175?

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It's going to pay. What if I live to 200? It's going to pay. The cash refund part means that

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when you die, or if it's joint, when the second person dies, 100% of any unused money goes to

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the list of beneficiaries. So, you got that one. That's life with cash refund, joint life with cash

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refund. The other is life with installment refund, or joint life with installment refund. Same thing.

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As long as you're breathing on a respirator, one of you is on a respirator, joint,

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it's going to pay. But installment refund is what I call lovingly handcuffing your beneficiaries. If

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you have the daughters that I do, or the kids that I do, they're going to show up at the funeral

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in a Lamborghini and/or Ferrari. Okay? This is going to happen. They're going to helicopter

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in. There's going to be a Lamborghini waiting on them. But what installment refund does is

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it makes sure that they're not going to pay cash for it. So installment refund means when you die,

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or if it's joint, the second spouse dies, the same payment is being paid to the beneficiaries

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until the money's gone. In both cases, the evil annuity company doesn't keep the money. Now,

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a lot of you out there are going, that's not how I understand it. I think you're wrong, son. When

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you die, the annuity company keeps the money. That's life only or joint life only. That's if you

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hate your beneficiaries and/or family, which is fine, or you want the highest payment. But when

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you die, money goes poof. But 99.999999999% of the time, it's cash refund or installment refund.

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You could also do, you know, life with a period certain, etc. But cash refund and installment

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refund are the most efficient mathematically for you to get lifetime income, the highest payment,

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and protect 100% of the principal. Okay? That's immediate. So deferred, let's go back to the

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two questions. What do you want the money to contractually do? Lifetime income. When do you

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want those contractual guarantees to start? Three years, five years, seven years, whatever. That's

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a deferred income annuity or an income rider. And we're going to quote both. So I want it to defer,

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single life or joint life, for x amount of years and start in six years or start in seven years.

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That's what I call an income later quote. You know, immediate annuities— income now; you know,

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deferred is income later. Okay? So that's how that works. Same structures apply. If it's an

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income rider, 100% of any unused money out of that accumulation value goes to the beneficiaries. So

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that misconception of annuity company keeps the money, it's a ripoff— you are dumb as a box of

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hair if you're saying that out loud. Please don't do that if you don't know the truth. Okay? Told

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someone the other day in another video that if you're at a cocktail party and someone says that

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in front, just throw the drink in their face. Just throw it in their face and say, "Stan will pay

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for the dry cleaning, but he told me to do that." Now, deferred annuities can also mean a multi-year

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guarantee annuity. Okay? Which is the annuity industry's version of a CD, guaranteed interest

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rate for a specific period of time. Fixed index annuity is a deferred annuity. You know, you can

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have it as, you know, four years, five years, seven-year deferral. But most of the people,

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when they're talking about immediate and deferred, they're talking about income starting either now

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or income starting later. So, let's go backwards a little bit with single premium immediate

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annuities. It starts 30— as soon as 30 days from when the policy's issued, and you can defer

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out to a year. Once you get past a year, boom, magically, then magic that Stan has, it turns into

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a deferred income annuity. Same product, no market attachments, no moving parts, no annual fees,

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etc. This is straight pension, and a QLAC, which can be used inside of an IRA, is a DIA, which is

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a SPIA. They're all the same. You know, there's just nothing to them other than a straight pension

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based on primarily your life expectancy or life expectancies at the time you take the payment.

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I mean, it's just really that simple. Income rider's a different path to get to lifetime

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income, but still a lifetime income product. But income riders can be attached to either index

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annuities or variable annuities. Index annuities provide— those income riders provide a higher

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contractual guarantee, so that we look at them like that. So, you know, remember just the

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two questions, and then we're going to point you and quote those for the highest contractual

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guarantees. You can do that at my site yourself. Best pro-consumer annuity site on the planet,

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theannuityman.com. You can email me, I can do it for you, my team at [email protected],

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or you on the site can hit the free consultation button, and one of my team— they're all licensed

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in all 50 states, but not on commission— they're going to help you with the right solution as well.

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So immediate or deferred, pretty obvious how that works. But just remember, with immediate,

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single premium immediate annuities is pretty much your answer. With deferred, you have three:

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deferred income annuities, qualified longevity annuity contracts, and income riders. Income

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riders, you know, right now are being priced pretty favorably. Qualified longevity annuity

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contracts can only be used inside of your IRA. So a bunch of you out there are going, "Never

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put an annuity inside of an IRA." Okay, great. QLACs are designed for just that and put on the

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planet by the IRS and the Treasury Department to create lifetime income using your IRA assets. So,

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I guess in conclusion, I really wish I'd have done a video— oh, I did. I did. This counting

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clock you see above my head, that is a video I did on lifetime income, how lifetime income is priced,

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why it is a bargain right now. That's not a sales pitch; that is a fact. And I kind of break

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it down like I always do in easy-to-understand Stanglish— not English, Stanglish. So watch that

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video, shoot me an email, [email protected], and I'll see you next time.