periodic purchase deferred contract

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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.

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).

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.