An immediate annuity is typically funded with a lump sum and provides payments immediately.

• A. The contract owner receives money immediately only if it is funded with a lump sum.
• B. It pays out immediately, usually funded with periodic contributions.
• C. It begins paying after the accumulation stage.
• D. It pays only upon death.

Answer: (A)

An immediate annuity converts a lump-sum premium into a stream of payments that begins right away. That’s why funding with a single lump sum and starting the payouts immediately describes the product accurately. If you were funded with periodic contributions, you’d be looking at a different arrangement, not the typical immediate annuity. Payments starting after an accumulation period describe a deferred annuity, and paying only upon death describes a payout that isn’t the standard immediate annuity structure.