PSI Life Exam Practice Test

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Prepare for the PSI Life Exam. Utilize flashcards and multiple-choice questions with detailed hints and explanations. Ensure success on your exam!

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An immediate annuity begins making payments after which event?

the contract is signed
the annual premium has been paid
the first premium has been paid
the investment period ends

The correct answer is: the first premium has been paid

An immediate annuity begins making payments after the first premium has been paid. This type of annuity is designed to provide income right away, typically starting within one payment interval after the initial premium is deposited. As soon as the annuity is funded, the insurer begins to disburse regular payments to the annuitant. Immediate annuities differ from deferred annuities, where there is a waiting period before payments commence, allowing the invested funds to grow. Therefore, for immediate annuities, the focus is on the initiation of payments following the payment of the first premium, rather than events like signing the contract, paying annual premiums, or waiting for any investment period to conclude.