The Difference Between Ordinary Annuity and Annuity Due

Shawn Plummer

CEO, The Annuity Expert

What Are The Differences Between An Ordinary Annuity And An Annuity Due

FeatureOrdinary AnnuityAnnuity Due
Payment TimingPayments are made at the end of each period.Payments are made at the beginning of each period.
Common UseOften used for retirement annuities, life insurance annuities, and endowments.Common in business annuities, estate planning, and charitable gift annuities.
AdvantagesSimpler to set up and understand, generally less expensive.Provides immediate income, more flexibility for changing needs.
DisadvantagesDoes not provide immediate income, may not suit immediate financial needs.Typically more expensive than other annuity types.

In summary, an Ordinary Annuity is more straightforward and less expensive but delays income distribution until the end of the period. An Annuity Due, while more costly, offers immediate income and greater flexibility, making it suitable for those with immediate financial needs or changing circumstances.

Ordinary Annuities

An ordinary annuity is a type of annuity that pays out earnings over a set period of time. The most common type of ordinary annuity is a retirement annuity, which pays out earnings over the course of your retirement. Other types of ordinary annuities include life insurance annuities and endowments.

Advantages

Ordinary annuities have several advantages, including the fact that they are relatively simple to set up and understand. Additionally, ordinary annuities tend to be less expensive than other types of annuities.

Disadvantages

The main disadvantage of ordinary annuities is that they don’t provide immediate income. If you need immediate income from your annuity, an annuity due may be a better option.

Annuity Due Vs Ordinary Annuity

Annuity Due

An annuity due is an annuity that pays out earnings immediately. The most common type of annuity due is a business annuity, which pays out earnings to the owners of a business. Other types of annuities due include estate planning annuities and charitable gift annuities.

Advantages

Annuities due have several advantages, including the fact that they provide immediate income. Additionally, annuities due tend to be more flexible than ordinary annuities, which can make them a better option for people with changing needs.

Disadvantages

However, annuities due also have some disadvantages, including the fact that they are typically more expensive than other types of annuities.

Ordinary Annuity Vs Annuity Due

Next Steps

When choosing between an ordinary annuity and an annuity due, there is no one-size-fits-all answer. The best option for you depends on your needs and financial situation. If you’re not sure which type of annuity is right for you, talk to a financial advisor (like The Annuity Expert!). They can help you evaluate your options and choose the best annuity plans for your needs.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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