An annuity which starts paying benefits within a month after issuance is called a?

An annuity that begins paying benefits almost immediately after it is issued is called an immediate annuity. This type of annuity typically starts making payments to the annuitant within a short time frame, often within one month, following the deposit of a lump sum. The primary purpose of an immediate annuity is to provide a steady stream of income to the individual right away, often used by retirees to generate reliable cash flow.

In contrast, other forms of annuities, such as deferred annuities, require a waiting period before benefits are disbursed, which can range from several months to many years. Variable and fixed annuities can be immediate or deferred, but it is their nature of investment and payment structure that differentiates them from the immediate type. Immediate annuities are particularly suited for individuals seeking to convert a lump sum into income without delay.