What type of annuity can be purchased with a single premium?

What type of annuity can be purchased with a single premium?

• A. Deferred annuity
• B. Variable annuity
• C. Immediate annuity
• D. Universal annuity

Answer: (C)

An immediate annuity is specifically designed to be purchased with a single premium and provides payments to the annuitant almost immediately after the purchase. This type of annuity is favored by individuals looking for a guaranteed income stream right away, often used for retirement planning purposes. When someone invests a lump-sum payment into an immediate annuity, the insurer begins making periodic payments shortly thereafter, which can be structured to last for a specified number of years or for the lifetime of the annuitant. This immediate cash flow distinguishes it from other types of annuities, such as deferred annuities, which require build-up time before payments begin, or variable annuities that may involve additional complexities regarding investment options and fluctuating payments. Therefore, the immediate recognition and distribution of benefits tied to a single premium in this annuity makes it the correct answer.

An immediate annuity is specifically designed to be purchased with a single premium and provides payments to the annuitant almost immediately after the purchase. This type of annuity is favored by individuals looking for a guaranteed income stream right away, often used for retirement planning purposes.

When someone invests a lump-sum payment into an immediate annuity, the insurer begins making periodic payments shortly thereafter, which can be structured to last for a specified number of years or for the lifetime of the annuitant. This immediate cash flow distinguishes it from other types of annuities, such as deferred annuities, which require build-up time before payments begin, or variable annuities that may involve additional complexities regarding investment options and fluctuating payments.

Therefore, the immediate recognition and distribution of benefits tied to a single premium in this annuity makes it the correct answer.