What is the type of annuity that is purchased with a single monetary deposit called?

The type of annuity that is purchased with a single monetary deposit is known as an immediate annuity. This form of annuity begins making payments to the annuitant shortly after the initial investment is made, often within a year. The key aspect of an immediate annuity is that it converts a lump sum payment into a series of income payments, typically right away, allowing individuals to begin receiving income immediately or within a very short time frame following their deposit.

In contrast, a deferred annuity delays income payments until a future date after the initial investment. This means that the funds accumulate over time, potentially benefiting from compound interest, before payments commence. Additionally, fixed and variable annuities pertain to the nature of the payments or investment structure; fixed annuities provide guaranteed payments, while variable annuities offer payments that can fluctuate based on the performance of investment options. However, the defining feature of immediate annuities remains their immediate payout structure following a single upfront payment.