What is the primary feature of an immediate annuity?

An immediate annuity is designed to begin making periodic payments to the annuitant shortly after the initial investment is made, typically within a year. The primary feature is that it pays out immediately, allowing the recipient to start receiving income promptly. This can be particularly appealing for individuals looking for immediate income, such as retirees seeking to replace lost salary.

The other options focus on characteristics that do not align with the concept of an immediate annuity. For instance, a lump sum payment refers to a one-time distribution rather than regular payments over time. Deferring payments until retirement is more characteristic of a deferred annuity, which allows the investment to grow before payments start. Varying payments based on stock performance describes a variable annuity rather than an immediate annuity, which typically offers fixed or predictable payouts.