When does an immediate annuity begin making payments?

When does an immediate annuity begin making payments?

• A. After the first premium has been paid
• B. After the contract is delivered
• C. After the policy is issued
• D. After the beneficiary is named

Answer: (A)

Immediate annuities start paying out right after they’re funded. The key point is there’s little to no deferral period—the payments begin once the premium is paid into the contract, commonly with a single premium in the case of a single-premium immediate annuity. The other steps in the process—contract delivery, policy issuance, or naming a beneficiary—don’t determine when payments start. They’re about administration or designation, not the timing of the payout.

Immediate annuities start paying out right after they’re funded. The key point is there’s little to no deferral period—the payments begin once the premium is paid into the contract, commonly with a single premium in the case of a single-premium immediate annuity. The other steps in the process—contract delivery, policy issuance, or naming a beneficiary—don’t determine when payments start. They’re about administration or designation, not the timing of the payout.