What characteristic is associated with an Immediate Annuity?

An immediate annuity is characterized by the fact that it provides income payments that begin almost immediately after a lump-sum premium is paid. Typically, the first payment is made within one month after the purchase of the annuity. This defining feature relates closely to the option discussing the single premium payment, as immediate annuities are usually funded with a one-time premium, allowing for immediate access to payouts.

This structure offers individuals a predictable stream of income, often utilized for retirement planning purposes. The annuitant pays a single premium and, in return, receives scheduled payments that may last for a certain number of years or throughout their lifetime, depending on the terms chosen at the time of the purchase.

The options related to delayed payments and payments starting after a specified time do not apply to immediate annuities, as these annuities are designed specifically to begin payouts right away. The guaranteed payout period, while it can apply to some types of annuities, is not a defining characteristic of immediate annuities, focusing instead on the timing of the payments.