Final answer:
An immediate annuity is associated with a lack of an accumulation period, as it is designed to start payment immediately after a single premium is invested.
Step-by-step explanation:
The question asks which of the following is associated with an immediate annuity: A. Tax-free benefit payments. B. Installment premium payments. C. Lack of an accumulation period. D. Lump-sum benefit. The correct answer is C. Lack of an accumulation period. Immediate annuities are designed to begin payments almost immediately after a lump sum is invested, which means there's no real accumulation phase where the money grows over time before payouts begin.
Unlike a traditional IRA, where there is typically a tax on the lump sum upon withdrawal, or a cash-value life insurance policy, which includes a death benefit and builds cash value over time, immediate annuities are straightforward in their structure and provide periodic payments to the annuitant starting shortly after the single premium is paid. These are often used by retirees who wish to convert a portion of their savings into a stream of income.