The primary difference is the timing of payments. In an Annuity Due, deposits are made at the beginning of each payment period, meaning every deposit immediately starts compounding and earns interest for the entire period. In an Ordinary Annuity, deposits occur at the end of each period, earning interest starting in the subsequent cycle. An Annuity Due always produces a higher accumulated end balance than an Ordinary Annuity with identical payments.

The accumulation phase is the period during which you deposit money into the annuity (either via an upfront lump-sum or ongoing periodic contributions) and allow the funds to grow on a tax-deferred basis. The payout phase (annuitization) begins when you convert that accumulated balance into guaranteed periodic income streams for a set term or for life.

With a non-qualified annuity, interest, dividends, and capital gains accumulate without being taxed in the year they are earned. Because taxes are deferred until withdrawal, 100% of your earnings remain invested to compound over time, generating significantly greater long-term wealth compared to a taxable account subject to annual dividend or capital gains drag.

A Fixed Annuity provides a guaranteed minimum interest rate set by the insurance provider. A Variable Annuity invests in sub-accounts (similar to mutual funds), providing higher potential upside along with market risk. A Fixed-Indexed Annuity credits interest based on the performance of an underlying equity benchmark (like the S&P 500) while providing a guaranteed minimum floor (typically 0%) against loss of principal.

Yes! This calculator runs a full monthly simulation engine that accurately compounds both recurring monthly deposits and annual lump-sum additions according to your selected period timing.