Which annuity begins making payments immediately after purchase?

Which annuity begins making payments immediately after purchase?

• A. Deferred Annuity
• B. Immediate Annuity
• C. Flexible Premium Annuity
• D. Indexed Annuity

Answer: (B)

An immediate annuity is defined by when the payments begin. It is funded with a lump sum or single premium and starts paying you right away, typically within one payment period after purchase. There is no extended accumulation phase. In contrast, a deferred annuity is designed to accumulate value first, with withdrawals starting at a later date. A flexible premium annuity refers to variable contributions rather than timing, and an indexed annuity describes how interest is credited based on an index, not when payments begin. So the correct choice is the one that starts payments immediately after purchase. For example, you buy today and start receiving monthly checks next month.

An immediate annuity is defined by when the payments begin. It is funded with a lump sum or single premium and starts paying you right away, typically within one payment period after purchase. There is no extended accumulation phase. In contrast, a deferred annuity is designed to accumulate value first, with withdrawals starting at a later date. A flexible premium annuity refers to variable contributions rather than timing, and an indexed annuity describes how interest is credited based on an index, not when payments begin. So the correct choice is the one that starts payments immediately after purchase. For example, you buy today and start receiving monthly checks next month.