When does an immediate annuity generate income for the policyholder?

An immediate annuity is specifically designed to start providing income to the policyholder shortly after it is purchased. The defining characteristic of an immediate annuity is that it begins to pay out income almost immediately, typically within one payment cycle, which is often within a year of the issue date. This feature makes immediate annuities appealing for individuals who are looking for a reliable income stream right away, such as retirees seeking to utilize their savings for living expenses.

The other options presented do not align with the primary function of immediate annuities. There is no requirement for a lengthy accumulation period or a specified retirement age to start receiving income. Additionally, the performance of the market does not impact the timing of income payments because immediate annuities typically offer fixed payouts based on the terms established at the time of purchase.