Life License Qualification Program (LLQP) Practice Exam

Which type of annuity would NOT typically be suitable for providing income for life starting at a specific future date?

1. Flexible Premium Deferred annuity

2. Variable annuity

3. Immediate annuity

4. Straight Life annuity

The correct answer is: Immediate annuity

An immediate annuity is specifically designed to begin disbursing income almost immediately—usually within a month of the investment. This type of annuity is not aimed at waiting until a specific future date to commence payments, which is typically the case for strategies involving other types of annuities. In contrast, flexible premium deferred annuities and variable annuities generally allow for the accumulation of funds over time before income distributions start, making them more suitable for future income starting at a set date. A straight life annuity, while designed to provide income for life, would also require that payments commence immediately upon purchase. Therefore, the characteristic of an immediate annuity being designed for immediate payouts, rather than deferring them to a future date, makes it unsuitable for the specified scenario of providing income that starts at a predetermined future point.