What type of annuity pays out benefits beginning at a future date rather than immediately?

The correct response identifies a deferred fixed annuity, which is designed to pay out benefits at a specified future date, rather than right after the initial investment. This type of annuity allows the investment to grow over time before the payout begins. During the accumulation phase, the funds can grow on a tax-deferred basis, providing an advantage for those looking to save and invest for retirement or other long-term goals without immediate tax implications.

In contrast, when one considers an immediate fixed annuity, it initiates payout shortly after the initial premium payment, typically within a year. Therefore, it does not meet the criteria for the question, which specifically asks for benefits that begin at a future date.

The immediate variable annuity also starts paying out benefits right away, but the payouts can fluctuate based on the performance of the underlying investments. This again does not align with the requirement of beginning payout at a future date.

On the other hand, a deferred variable annuity permits funds to grow, much like a deferred fixed annuity, but the payouts depend on the performance of investment options chosen. Yet, it remains categorized differently from the fixed structure referenced in the correct answer.

Thus, a deferred fixed annuity appropriately fulfills the question's requirement regarding annuities that