Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
An immediate annuity is distinguished from a deferred annuity primarily by:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An immediate annuity is purchased with a single premium, and income payments begin within one payment interval — per the official objectives, within 12 months of the contract date. A deferred annuity, by contrast, accumulates money for a period before annuitization begins. Timing of first payment is the defining difference.
Why the other options are wrong
- B) Deferral of payout for a period defines a deferred annuity, not an immediate one.
- C) Age is not the defining feature; both young and old owners can hold either type.
- D) Market-linked performance describes a variable or indexed annuity; immediate annuities can be fixed or variable.
Memory hook
Immediate = pay a lump, start collecting within a year. Deferred = save first, collect later. It is all about WHEN the income starts.