Utah Life Producer Practice Exam

An immediate annuity is a financial product specifically designed to start providing income payments right after the purchase. When an individual invests in an immediate annuity, they typically make a lump-sum payment to an insurance company, which then begins disbursing regular payments to the annuitant shortly thereafter—often within one month. This type of annuity is ideal for individuals looking to secure a stable and predictable income stream, such as retirees who need to cover their living expenses.

In contrast, a deferred annuity requires a waiting period before income payments begin, making it unsuitable for someone looking for immediate income. The other types of annuities mentioned do not offer the immediate income feature: a fixed-kind annuity generally refers to one that provides fixed payments but may still defer those payments; and a market-linked annuity associates its returns with market performance, which typically involves a period of accumulation before yielding payouts.