Immediate Annuity
Income begins within one payment interval (typically a year) after purchase, funded with a single premium, suited to those already retiring.
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Practice This Concept
Under the California licensing examination objectives, for a contract to qualify as an immediate annuity, the first income payment must begin within:
12 months of the contract date — An immediate annuity is one whose first income payment begins within one payment interval, which the official examination objectives state is within 12 months of the contract date. It is typically purchased with a single premium. Any annuity whose payments begin later than that is classified as a deferred annuity, because funds accumulate for a period before the income stream starts.
CA-specific example
A deferred annuity differs from an immediate annuity in that a deferred annuity:
Accumulates value for a period before income payments begin, and may be funded by a single premium or flexible periodic premiums — A deferred annuity has an accumulation phase: value builds up over time before the owner elects to annuitize, and funding may be a single premium or flexible premiums paid over time. The defining feature is the delay between purchase and the start of income. Immediate annuities, by contrast, begin income within one payment interval — under the official objectives, within 12 months of the contract date.
National insurance concept
- State RegulationsUnder the California licensing examination objectives, for a contract to qualify as an …
- AnnuitiesA deferred annuity differs from an immediate annuity in that a deferred annuity:
- AnnuitiesAn immediate annuity is purchased with a single premium, and its income payments must b…
- AnnuitiesA single premium deferred annuity (SPDA) is characterized by:
- AnnuitiesA structured settlement in a personal injury case is most often funded with which type …
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