Massachusetts State Life Insurance Practice Exam

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Study for the Massachusetts State Life Insurance Exam. Use our flashcards and multiple choice questions, each with hints and explanations. Prepare confidently for your test!

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When does an immediate annuity typically start providing income payments?

Within the first month
Within the first three months
Within the first year
After one year

The correct answer is: Within the first month

An immediate annuity is designed to start making income payments to the annuitant very soon after the initial investment is made. Typically, these payments begin within a month following the purchase of the annuity contract. This immediate payout feature differentiates it from deferred annuities, which accumulate funds and delay payments until a specified future date. By starting payments within the first month, immediate annuities cater to individuals who seek to provide immediate income, often benefitting retirees or those needing quick access to cash flow in their financial planning. Thus, this short waiting period to commence payments makes immediate annuities a suitable option for those who require immediate financial support.