New York Insurance Exam Practice Question
Which of the following is a characteristic of an immediate annuity?
Correct Answer: B
Rationale: Immediate annuities are designed to start payments shortly after purchase, typically within a month. This feature distinguishes them from other annuities that have a deferral period.
Option A is incorrect as it describes deferred annuities, where payments begin after a specified period.
Option C is misleading; while immediate annuities do not offer tax-deferred growth, this is not a defining characteristic.
Option D is also incorrect; immediate annuities generally involve lower investment risk since they provide guaranteed payouts rather than fluctuating investment returns.
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