What is Flexible Premium?
A flexible premium annuity allows you to make additional deposits over time after the contract is initially funded. Unlike a single premium contract, which locks at issue, flexible premium contracts let you add money on a recurring or ad-hoc basis – often subject to minimum and maximum contribution limits set by the carrier.
How Flexible Premium Annuities Work
Each new deposit may receive its own credited rate based on prevailing rates at the time of contribution. This is similar to how a bank savings account behaves – new deposits earn the current rate rather than the rate locked in at account opening. Some carriers blend new deposits into a single accumulating value at the original rate; others segregate each deposit into a separate “bucket” with its own term.
When Flexible Premium Makes Sense
Flexible premium is most common in deferred income annuities (DIAs) and pre-retirement accumulation strategies where you want to save into a tax-deferred vehicle over time. For retirement-stage buyers with a known lump sum, single premium contracts almost always offer better rates because the carrier can match the full deposit to long-duration bonds immediately. MYGAs and FIAs are typically single premium products.
Frequently Asked Questions
What is a flexible premium annuity?
A flexible premium annuity allows you to make additional deposits over time after the contract is initially funded.
How do flexible premium annuities credit interest on new deposits?
Each new deposit may receive its own credited rate based on prevailing rates at the time of contribution.
When does flexible premium make sense?
Flexible premium is most common in deferred income annuities (DIAs) and pre-retirement accumulation strategies where you want to save into a tax-deferred vehicle over time.
