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There are two types of Annuities - Immediate annuities
and Deferred annuities.
Under Immediate annuities, you start receiving
annuity payments as soon as you pay the premium usually in a lump sum.
In the case of Deferred annuities, the payments
to the annuitant start after a certain deferment period. Typically, the annuitant
pays annuity premiums in installments during the deferment period.
Generally, people pay less premium for an annuity that provides
future payments because the deferment period allows the insurance company to
invest your premiums at a profit, thereby reducing the cost of the annuity to
you.