Multiple choice

What are the two distinct phases of a deferred annuity?

  1. Waiting and Starting phases

  2. Loading and Unloading phases

  3. Accumulation and Payout phases

  4. Commutation and Continuation phases
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C Correct answer
Explanation

A deferred annuity is where periodic benefits are scheduled to begin after a period, say at least 12 months after the date of purchase of the annuity. Every deferred annuity in turn has two periods – an accumulation period between when the annuity is purchased and the annuity payments begin, and a payout or liquidation period during which the insurer makes the annuity payments.

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