TNL LLQP Segregated Funds and Annuities Practice Exam

The correct choice is the deferred annuity. A deferred annuity is designed to start making payments to the annuitant at a specified future date. This type of annuity allows individuals to accumulate funds over time, usually during their working years, before receiving periodic payments at retirement or another predetermined time.

In contrast, an immediate annuity begins payments almost immediately after a lump sum is paid into the contract. This is typically chosen by individuals who require immediate income, often after retirement.

Fixed and variable annuities refer to how the investment growth is managed and how the payouts are structured. A fixed annuity guarantees a set return, while a variable annuity allows for investment in various portfolios, affecting the payout based on the performance of those investments. Neither of these terms specifically denotes the timing of payments as is noted in the definition of a deferred annuity.

Therefore, a deferred annuity is clearly defined by its characteristic of postponing the payment to a future date, distinguishing it distinctly from other types of annuities.