Periodic Purchase Deferred Contract

Periodic purchase deferred contract

A fixed or variable annuity contract for which fixed-amount premiums are paid either monthly or quarterly, and that does not begin paying out until a time elected by the annuitant.

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Periodic Purchase Deferred Contract

An annuity purchased with periodic payments by the annuitant, who does not begin to receive payments until some future date. Like all deferred annuities, a periodic purchase deferred contract has two phases, a savings phase and an income phase. The savings phase involves the annuitant making the periodic payments and having them invested on his/her behalf. In the income phase, the annuitant receives payments. It is important to note that a periodic payment deferred contract, like most deferred annuities, is not taxed until the income phase begins. It also may pay a death benefit to the survivor(s) of the annuitant. See also: IRA, 401(k).

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periodic purchase deferred contract

A deferred annuity purchased with a series of premium payments. For example, an individual might obtain a lifetime monthly income by making annual premium payments to an insurance company prior to retirement. Compare single-premium deferred annuity.