What type of annuity starts making payments immediately upon purchase?

A single premium immediate annuity is designed to begin making payments to the annuitant almost immediately after the premium payment is made. This type of annuity requires a single lump sum payment upfront, and in return, it provides a stream of income that starts right away, often within one month of the purchase.

The immediate nature of this annuity is particularly attractive to individuals seeking to secure immediate income, such as retirees who need to supplement their retirement income without delay. The timing of the payments can be customized based on the terms of the contract, but the key characteristic is that payments start almost immediately after the purchase.

In contrast, deferred annuities involve a waiting period before income payments begin, allowing the investment to grow over time. Variable annuities offer investment options and can lead to different payment amounts based on the performance of the chosen investments, but they do not automatically start payments immediately. Fixed annuities, while they do provide guaranteed payments, also have various structures regarding when payments begin, with many being deferred until a later date. Thus, the defining feature of the single premium immediate annuity is its clear intention to start payments immediately upon its establishment.