The primary distinction between these two types of annuity contract has to do with the distribution phase of the contract. Every annuity contract will fall under one of these two categories. The deferred annuity is designed to defer distributions until a later date in time. This is generally a couple of years from the inception of the contract, and corresponds with a future need. Many annuity owners defer their distributions until they reach age 59 ½, or retirement age.

Once the accumulation phase is over, and the deferred distributions are made to the account beneficiary, the two types of annuities behave roughly the same. As the name suggests, fixed immediate annuities are designed to provide the annuity owner immediate, or near immediate distributions.

The distributions from both account types will typically happen over a fixed period and provide a fixed income for the duration. Some contracts allow a life option to be added, allowing the payments to continue for the life of the annuity owner or annuitant.

In an immediate contract, the payments begin one period after the creation of the account. This means that they distributions will begin one month from creation in a monthly payment schedule or one year from creation in a yearly distribution schedule. Though this is not strictly immediate, it allows the insurance company sufficient time to prepare, grow, and subsequently distribute your income payments.

Depending on your financial need with help to decide which annuity type is right for you. Many plan for and enjoy the income of a deferred annuity, and find that the tax-deferred growth is an option that fits nicely with their long-term financial plans.