Tennessee Insurance Practice Exam

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Prepare for the Tennessee Insurance Exam with engaging flashcards and comprehensive multiple-choice questions. Understand hints and receive detailed explanations for each query. Ace your test with confidence!

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What type of payments does an immediate annuity provide?

One-time payment
Lifetime payments
Payments for a specified duration
Monthly payments only

The correct answer is: Lifetime payments

An immediate annuity provides lifetime payments, which is a fundamental characteristic of this financial product. When an individual purchases an immediate annuity, they make a lump-sum payment to an insurance company, which then begins to disburse regular payments to the annuitant almost immediately, typically starting within a year of the purchase. By opting for an immediate annuity, the individual effectively converts a single payment into a stream of income, which can last for the rest of their life. This is particularly beneficial for individuals seeking financial stability in retirement, as it ensures they do not outlive their income. While there are variations of annuities that may offer one-time payments, payments for a specified duration, or monthly payments only, an immediate annuity specifically focuses on providing ongoing payments that last for the annuitant's lifetime, making option B the most accurate choice.