Which type of annuity begins payments immediately after purchase?

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Multiple Choice

Which type of annuity begins payments immediately after purchase?

When you think about annuities, a key distinction is when payments start after you fund the contract. An immediate annuity is designed to begin payments right away after purchase, usually within the next payment period, and these payments can last for a set number of years or for the life of the annuitant. Deferred annuities, by contrast, delay payments until a future date, which is the opposite of immediate. Indexed annuities describe how interest is credited (based on an index) and can be structured as either fixed or variable and may involve deferral. The term general account refers to how the insurer funds some contracts and isn’t a type of annuity with a distinct payout timing.

When you think about annuities, a key distinction is when payments start after you fund the contract. An immediate annuity is designed to begin payments right away after purchase, usually within the next payment period, and these payments can last for a set number of years or for the life of the annuitant.

Deferred annuities, by contrast, delay payments until a future date, which is the opposite of immediate. Indexed annuities describe how interest is credited (based on an index) and can be structured as either fixed or variable and may involve deferral. The term general account refers to how the insurer funds some contracts and isn’t a type of annuity with a distinct payout timing.

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