Definition of an immediate annuity.

An immediate annuity is designed to begin income payments shortly after purchase, usually within one year.

Key structural feature.

Immediate annuities are purchased with a single lump sum.

Payments begin almost immediately.

Why there is no accumulation period.

The accumulation period exists only in deferred annuities, where funds grow before payout.

Immediate annuities move directly into the annuity (payout) phase.

Evaluate each option.

A . Purchased in installments

Incorrect; installment purchases describe flexible premium deferred annuities.

B . Pays a lump sum

Incorrect; it pays periodic income, not a lump sum.

C . Lacks an accumulation period

Correct.

D . Tax-deductible contributions

Incorrect; contributions are generally not deductible unless within a qualified plan.

Conclusion.

An immediate annuity has no accumulation period.