Deferred vs. Immediate Annuity
✓ Last verified 14 Sep 2026
The short version
An immediate annuity starts paying out right after purchase; a deferred annuity accumulates for a chosen period first, then begins payouts later - the choice depends on whether you need income now or are planning ahead for a future retirement date.
An immediate annuity begins regular payouts almost right after the lump sum is paid in - the typical structure when annuitizing an NPS corpus at actual retirement, since income is needed right away. A deferred annuity is purchased earlier, accumulates (sometimes with guaranteed growth) for a chosen deferment period, and only starts paying out at a later date you select - useful for locking in a future income stream years ahead of when it's actually needed. See our full annuity glossary entry for the broader mechanism both types share.
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