YOU ASK:

What is the definition of Immediate Annuity?

WE ANSWER:

An Immediate Annuity is a type of annuity that requires the payment of a lump sum, and the annuity payments can commence right afterwards (usually at the end of a year).

For example, John gets an immediate annuity and pays a premium of $150,000 on January 1 of this year. The next year, starting from January 1, he will begin receiving income payments from the annuity.

An Immediate annuity may either be variable or fixed. Immediate annuities are usually life annuities, where the annuitant gets regular and level payments throughout the rest of his life. Upon the death of the annuitant, the payments will stop.

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