What is the primary benefit of a Deferred Annuity?

The primary benefit of a Deferred Annuity is the tax-deferred growth of the investment. This means that the earnings on the investment are not subject to income tax until they are withdrawn. This feature allows the investment to grow more effectively over time, as the interest or investment gains can compound without the immediate tax burden that would typically apply to other types of savings accounts or investment vehicles.

By deferring taxes on growth, individuals can accumulate a larger amount over time, which can be especially beneficial for retirement planning. Once withdrawals are made, typically during retirement when an individual may be in a lower tax bracket, taxes will be owed on the amounts taken, but the initial growth phase allows for potentially higher overall returns due to the advantage of compounding.

The other options, while they may be features of different financial products or types of annuities, do not capture the fundamental advantage of a Deferred Annuity in the same way as the tax-deferred growth does. Immediate income streams, higher interest rates, and guaranteed income for life often pertain to different annuity structures or savings products, but the essence of a Deferred Annuity is centered around its tax benefits during the accumulation phase.