Annuity that begins paying income soon after a lump-sum premium is paid, often used to convert savings into near-term retirement cash flow.
An immediate annuity is an annuity that begins paying income soon after a lump-sum payment is made.
It is commonly used when a retiree already has accumulated capital and wants to turn that capital into current retirement income rather than keep deferring the payout phase.
Immediate annuities matter because they are one of the most direct ways to convert assets into retirement cash flow.
payout starts quickly rather than after a long deferral period
retirees exchange liquidity for income stability
option design affects whether payments are fixed, life-based, or term-based
That makes the immediate annuity a central retirement-income tool rather than just an abstract annuity subtype.
Deferred Annuity: Annuity whose payout begins later.
Annuitize: The broader conversion process often embodied by an immediate annuity purchase.
Period Certain Annuity: One possible payout structure.
Retirement Income: The near-term cash-flow goal served by the product.