NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products
Rakesh, aged 40, wants a pension product in which he pays a single lump sum to an insurer and starts receiving a regular income immediately for life. Which product fits this description?
An immediate annuity fits, because the buyer pays a single lump sum to an insurer and starts receiving regular income straight away, typically for life. A deferred annuity first has an accumulation period, so it does not provide immediate income.
- ADeferred annuity with a 20-year accumulation period
- BImmediate annuityCorrect
- CUnit linked pension plan in the accumulation phase
- DRecurring deposit
Explanation
An immediate annuity is bought with a lump sum (single premium) and begins payouts right away, usually within a year. A deferred annuity has an accumulation phase before payouts, so it does not match. The other options do not give a guaranteed lifelong income.
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