Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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After purchasing an Immediate Annuity, when do the insurance companies typically start paying out benefits?

30 days
45 days
60 days
90 days

The correct answer is: 60 days

When an individual purchases an Immediate Annuity, the payouts typically begin almost immediately—hence the name "immediate" annuity. However, while the first payment is usually scheduled to occur within a short time frame after the contract is established, insurance companies generally set a specific period for these initial payments to commence. In most cases, the payments are designed to start after about 30 days. However, many insurance companies may establish a standard waiting period before the first payment is issued, which often can extend to 60 days or even longer. The choice of 60 days reflects a common practice among insurers, indicating that benefits could begin roughly two months after the annuity is purchased. Thus, the expectation that payments begin regularly on a monthly schedule around that time frame (60 days) aligns with typical industry standards.