What is a key requirement for purchasing an immediate annuity?

A key requirement for purchasing an immediate annuity is a single payment at the time of purchase. This means that the individual wishing to buy the annuity must provide a lump sum payment upfront. Immediate annuities are designed to begin making periodic payments to the annuitant shortly after the initial investment, typically within a year of the purchase. This structure offers a way for individuals to convert a one-time payment into a stream of income, usually for retirement purposes.

The requirement of a single payment contrasts with options that may involve ongoing contributions or proof of income, which are not necessary for this particular type of annuity. The focus is on the immediate conversion of that lump sum payment into a regular income stream, emphasizing the need for a one-time transaction at the initiation of the annuity.