Question 82

An Immediate Annuity will have a single premium.

An Immediate Annuity is characterized by a single premium payment made by the annuitant to the insurer, which then begins to provide income payments almost immediately.

A) an increasing premium

An increasing premium is not applicable to an Immediate Annuity, as this type of annuity requires a one-time payment rather than multiple payments that increase over time.

B) a decreasing premium

A decreasing premium does not fit the structure of an Immediate Annuity, which is based on a lump sum payment rather than a series of payments that decrease.

C) a single premium

This is the defining feature of an Immediate Annuity. It requires a one-time payment that triggers the start of immediate income payouts, making it the correct choice.

D) a level premium

A level premium suggests a consistent payment schedule over time; however, an Immediate Annuity is based on a single premium payment, which distinguishes it from other types of annuities that may use level premiums.

Conclusion

The correct answer is definitively C, as an Immediate Annuity is fundamentally structured around a single premium payment. Options A, B, and D do not accurately reflect the characteristics of Immediate Annuities, as they imply multiple payments or adjustments that do not apply to this financial product.