Individual deferred non-variable and variable annuities combine guaranteed growth with investment-based growth, with income starting at a future date.
An individual deferred non-variable and variable annuity may sound like a mouthful, but the idea behind it is actually quite practical. This type of annuity blends two different ways of growing your money into one contract, giving you both stability and growth potential as you plan for the future.
Understanding This Type of Annuity in Plain English
An individual deferred non-variable and variable annuity is an insurance contract you buy on your own, usually for retirement. “Deferred” means you don’t receive income right away. Instead, your money grows over time, and payments begin at a future date you choose.
What makes this annuity different is that it has two accumulation parts:
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A non-variable portion with guaranteed interest
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A variable portion that grows based on investment performance
You can think of it as putting part of your money in a safe lane and part in a growth lane.
How the Accumulation Phase Works
During the accumulation phase, your contributions are split between two types of funds.
Non-Variable (Guaranteed) Portion
This portion grows at a guaranteed crediting interest rate set by the insurance company. Some contracts may also offer additional interest based on certain conditions.
This part provides:
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Stability
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Predictable growth
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Protection from market losses
It acts as a safety net for your savings.
Variable (Investment-Based) Portion
The variable portion grows — or declines — based on the performance of investment portfolios you choose. These portfolios often include stock and bond funds.
This part offers:
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Higher growth potential
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Exposure to market returns
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More risk than the guaranteed portion
Your overall account value reflects the combined performance of both portions.
A Simple Real-Life Example
Imagine you invest $100,000 into an individual deferred non-variable and variable annuity.
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$60,000 goes into the guaranteed portion earning steady interest
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$40,000 goes into variable investment options
If markets perform well, the variable portion may grow significantly. If markets struggle, the guaranteed portion helps cushion the impact.
Over time, this balance can help smooth out ups and downs while still offering growth opportunities.
When Do Payments Begin?
Like all deferred annuities, income payments start at a future date you select, often during retirement.
When it’s time to receive income, you can usually:
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Convert the full value into regular payments
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Choose fixed or variable payment options
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Adjust how income is calculated based on contract terms
The flexibility of payment options is one of the reasons people consider this type of annuity.
Why People Choose This Combination Annuity
Many people are drawn to individual deferred non-variable and variable annuities because they want a mix of security and growth.
Common reasons include:
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Reducing overall investment risk
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Avoiding full exposure to market swings
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Keeping some guaranteed growth
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Preparing for long-term retirement income
This type of annuity is often appealing to people who want more balance than a purely variable annuity offers.
Risks and Important Considerations
Even with guaranteed elements, these annuities are not risk-free.
Things to consider include:
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Fees and charges, especially on the variable side
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Market risk affecting the variable portion
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Surrender periods for early withdrawals
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Tax penalties if withdrawn too early
Understanding how much money goes into each portion is essential.
How It Compares to Other Annuities
Compared to a fixed annuity, this option offers more growth potential. Compared to a fully variable annuity, it offers more stability.
It’s designed for people who want a middle ground between safety and investment opportunity.
The Big Picture
An individual deferred non-variable and variable annuity combines guaranteed interest growth with market-based growth, with income beginning at a future date.
For long-term savers seeking both protection and potential, this hybrid annuity can be a flexible and thoughtful retirement planning tool.
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