[amp_mcq option1=”Deferred annuity” option2=”Immediate annuity” option3=”Both A and B” option4=”None of the above” correct=”option3″]
The correct answer is: C. Both A and B
An annuity is a contract between an insurance company and an individual in which the insurance company agrees to make regular payments to the individual, usually for life, in exchange for a lump sum payment or a series of payments made by the individual.
There are two main types of annuities: deferred annuities and immediate annuities.
A deferred annuity is an annuity in which the payments do not begin until a specified future date, usually after the individual retires. During the deferral period, the individual’s money is invested by the insurance company and grows tax-deferred.
An immediate annuity is an annuity in which the payments begin immediately after the individual purchases the annuity. The amount of the payments is based on the individual’s age, health, and the amount of money they invest.
Both deferred annuities and immediate annuities can be purchased with life insurance. This means that if the individual dies before the payments from the annuity begin, the insurance company will pay a death benefit to the individual’s beneficiaries.
If you are considering purchasing an annuity, it is important to speak with a financial advisor to determine which type of annuity is right for you.