What is immediate annuity?

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Immediate Annuity is where pension payouts start within a year from the payment of the premium for the retirement insurance policy. The policyholder deposits a lump sum at the existing annuity rates and starts receiving regular fixed pension payments immediately, with a choice of different payout options. Tax benefits are applicable on premium paid. In the event of the policyholder’s death, the nominee receives the money. An immediate annuity is suitable for those about to retire and have a lump sum to invest, but being non-participating products, they do not earn bonuses, unlike deferred annuity plans.