What is a primary characteristic of immediate annuities?

Immediate annuities are specifically designed to commence regular income payments almost immediately after the initial investment is made. This characteristic distinguishes them from other types of annuities, such as deferred annuities, which do not begin payouts until a later date. The instant income feature is particularly appealing to individuals who are looking for a reliable source of income, often during retirement.

In contrast, while options regarding large initial investments or aspects of tax treatment may apply to certain types of annuities, they do not define immediate annuities. The aspect related to conversion to cash refers to the liquidity of the investment, which can vary significantly based on the specific terms of the annuity contract. Therefore, the defining trait of immediate annuities is their ability to provide income right away, making them a valuable tool for immediate financial needs.