An immediate annuity is an insurance product designed to convert assets into income immediately (typically within 30 days and seldom longer than 12 months from the date of purchase).

The consumer pays a premium to the insurance company and the insurance company makes a stream of periodic, income pay-outs to the annuitant. As is the case with deferred annuities, immediate annuities can either be fixed or variable.  

Taxable Distributions (and certain deemed distributions) are subject to ordinary income tax. With a fixed, immediate annuity, your periodic pay-out amount will always stay the same. With a variable, immediate annuity, your periodic pay-out amount will fluctuate, based on the performance of the investment options you have chosen within the annuity.