Advanced English Dialogue for Business – Deferred annuity

Listen to a Business English Dialogue About Deferred annuity

Audrey: Hi Maya, do you know what a deferred annuity is in business and finance?

Maya: No, I don’t. What does it mean?

Audrey: A deferred annuity is an insurance product that provides regular payments to the annuitant, typically during retirement, after an initial accumulation period where premiums are paid into the annuity.

Maya: Oh, so it’s like setting aside money now to receive regular income later?

Audrey: Exactly. Deferred annuities offer a way to save for retirement and provide a stream of income in the future, similar to a pension or Social Security.

Maya: Are there different types of deferred annuities?

Audrey: Yes, there are fixed deferred annuities, where the interest rate is guaranteed, and variable deferred annuities, where the return varies based on the performance of underlying investments.

Maya: How does the accumulation period work for a deferred annuity?

Audrey: During the accumulation period, the annuitant makes regular premium payments or a lump sum contribution, which grows tax-deferred until the annuity payments begin.

Maya: Can you withdraw money from a deferred annuity before the annuitization period?

Audrey: Yes, but there may be surrender charges or tax penalties for early withdrawals, depending on the terms of the annuity contract.

Maya: What happens during the annuitization period?

Audrey: During the annuitization period, the accumulated funds are converted into a stream of periodic payments, which may be fixed or variable depending on the type of annuity chosen.

Maya: Thanks for explaining, Audrey. Deferred annuities seem like a useful tool for retirement planning.

Audrey: No problem, Maya. They can provide financial security and peace of mind for individuals looking to supplement their retirement income.