An annuity that begins making monthly payments immediately after issuance is called a(n)?

An annuity that begins making monthly payments immediately after issuance is referred to as an immediate annuity. This type of financial product is designed to provide an income stream right away, typically commencing within one payment period after the initial investment is made.

Immediate annuities are often funded with a lump-sum payment, providing individuals with the confidence of knowing exactly when they will start receiving regular payments. This characteristic is particularly advantageous for retirees or individuals who require cash flow soon after their investment.

In contrast, other forms of annuities, such as deferred annuities, delay payment until a later date, creating a different financial planning strategy. Variable annuities link payouts to investment performance, leading to potentially variable payments, which is different from the fixed payouts of immediate annuities. Lifetime annuities ensure payments for the lifetime of the annuitant but can be structured as either immediate or deferred. Therefore, an immediate annuity is specifically defined by its immediate commencement of payments, distinguishing it clearly from other types.