PSI Ohio Insurance Practice Exam 2025 – All-in-One Guide to Exam Success

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What is a characteristic of an immediate annuity?

It requires ongoing premium payments.

It is purchased with a single premium.

An immediate annuity is characterized by being purchased with a single premium. When an individual buys an immediate annuity, they typically make a one-time payment, which then provides them with a stream of income that starts almost immediately, typically within a month or so. This feature distinguishes immediate annuities from other types of annuities, such as deferred annuities, which may require ongoing premium payments or accumulating cash value over time before providing income.

The single premium purchase structure allows for immediate access to the benefits of the annuity, making it an attractive option for those who prefer to start receiving payments right away. This model is particularly useful for retirees or those looking for stable income quickly after their investment.

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It has a flexible withdrawal feature.

It accumulates cash value over time.

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