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Which statement is NOT true about Immediate Annuities?

A. There is not accumulation period.
B. There is no cost basis for the annuitant.
C. They are used in structured settlements.
D. They can provide a lifetime payout.

1 Answer

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Final answer:

Immediate annuities can provide a lifetime payout, contrary to the statement provided in the question.

Step-by-step explanation:

An immediate annuity is a financial product that provides regular income payments to the annuitant starting immediately after the purchase of the annuity. It is a type of insurance contract sold by insurance companies. The annuity payments can be fixed or variable, and they can be structured to provide income for a specific number of years or for the lifetime of the annuitant.

One common misconception about immediate annuities is that they cannot provide a lifetime payout. However, this statement is not true. Immediate annuities are often used as a retirement income vehicle because they can provide a guaranteed income stream for the rest of the annuitant's life. The annuity payments continue as long as the annuitant is alive, ensuring a lifelong source of income.

Immediate annuities are a popular choice for individuals who want a predictable and stable income during retirement. By converting a lump sum of money into an immediate annuity, individuals can ensure they will receive regular income payments for the rest of their lives, regardless of how long they live.

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