Ace the Massachusetts Life Insurance Challenge 2025 – Secure Success and Insure Your Future!

A key characteristic of deferred annuities is that they begin making payments at a future date, rather than immediately. This means that during the accumulation phase, funds grow tax-deferred until withdrawals are made. While option C suggests that payments are made only after the first year, this statement requires nuance. The defining feature of deferred annuities is indeed that they do not start disbursing payments right away; however, the specifics of when payments start depend on the terms of the annuity. Generally, immediate annuities begin payments after a short period, but for deferred annuities, the exact timeline for disbursements is established upon purchase.

In context with the other options, immediate payments are not a characteristic of deferred annuities, and while higher surrender charges can sometimes be associated with the early withdrawal of funds, they are not an inherent feature of all deferred annuities. Furthermore, cancelling an annuity isn't as straightforward as suggesting they cannot be cancelled; many have terms and conditions that allow for some degree of early termination, though it may come with penalties or fees. Understanding these nuances helps clarify the nature of deferred annuities and their role in financial planning.