What is an immediate annuity?  
An immediate annuity is one in which the annuitant pays a lump sum as the purchase price and in return, he/she receives annuity payments. The annuity is referred to as immediate because the purchase price is payable immediately and the first annuity payment also starts immediately after one payment interval.

Depending on period of payments, an immediate annuity may also be classified as life, guaranteed or period certain annuity.

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