Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Life Insurance and AnnuitiesEasy
A Florida resident purchases an immediate annuity. When will the annuitant begin to receive payments?
- AOnly after the entire premium has been fully invested.
- BWithin one month from the date of purchase.
- CAfter a deferral period of at least one year.
- DUpon reaching a specified age, typically 65.
Show answer & explanationAnswer & explanation
Correct answer: B. Within one month from the date of purchase.
An immediate annuity is designed to begin making payments to the annuitant almost immediately after purchase, typically within one payment period (e.g., one month, one quarter), but no later than one year.
Why the other options are wrong
- A. The full premium is invested at purchase; this option doesn't accurately describe the timing of payments for an immediate annuity.
- C. This describes a deferred annuity, not an immediate annuity.
- D. While annuities can be structured to start at a certain age, an immediate annuity's defining characteristic is the rapid start of payments, not a specific age trigger.
Immediate Annuity
An annuity contract designed to begin making periodic income payments to the annuitant almost immediately after purchase, typically within one payment interval (e.g., one month) but no later than one year.
- Single premium payment
- No accumulation phase
- Payments start quickly (within 1 year)
Memory trick: Immediate? Payments are fast, not meant to last in a waiting phase.