Which of the following is NOT a characteristic of an immediate annuity?

An immediate annuity is defined by specific characteristics that distinguish it from other types of annuities. One of the main features is that payments begin immediately after the purchase, typically within one month. This time-sensitive start to payments is essential for people seeking immediate income, such as retirees.

The correct option, indicating a characteristic that is NOT associated with an immediate annuity, acknowledges that an immediate annuity generally does not offer both a cash refund option and a term certain arrangement as standard features bundled together. While it is true that some immediate annuities can be designed with a cash refund option, the primary function of most immediate annuities is to provide immediate income without the complexities of refund guarantees tied specifically to a term.

In contrast, the other features listed—payments beginning right after purchase, providing guaranteed income for a specified period, and typically requiring a lump-sum payment—are all characteristics consistent with immediate annuities. Each plays a critical role in the functionality and appeal of immediate annuities for individuals looking for assured income streams shortly after their investment.