Which of the following is a key feature of deferred annuities?

A key feature of deferred annuities is the potential for tax-deferred growth. This means that the earnings on the invested funds will not be taxed until they are withdrawn. This tax-deferred status allows the account to grow more quickly than a taxable account would because the investor can reinvest the interest, dividends, or capital gains without the immediate tax liability.

This feature is particularly beneficial for long-term savers and investors, as it enhances the overall growth potential of the investment. It also encourages individuals to save for retirement, as the funds can compound over time without the drag of taxes.

In contrast, instant income payments are more characteristic of immediate annuities rather than deferred annuities, which are designed for growth before income is drawn. The notion of higher interest rates for early withdrawals does not align with the typical structure of deferred annuities, as such withdrawals often incur penalties. Lastly, while some financial products might offer waivers or low fees, deferred annuities commonly have fees associated with early withdrawals to discourage accessing funds prematurely.