Which strategy involves purchasing two types of annuity contracts, including an immediate contract?

Which strategy involves purchasing two types of annuity contracts, including an immediate contract?

• A. Split Annuity Strategy
• B. Structured Settlement Annuities
• C. Participating Annuity
• D. Indexed Annuity Payments

Answer: (A)

The strategy tests balancing guaranteed income with growth by using two annuity contracts, one of which starts payments right away. In a split annuity approach, you convert part of a lump sum into an immediate annuity to provide a guaranteed income stream now (or soon), while the rest is placed into another annuity that defers growth or offers other features. This pairing lets you secure predictable cash flow for current needs while still aiming for growth or additional income later on. For example, you might purchase an immediate lifetime annuity to cover essential expenses, and allocate remaining funds to a deferred annuity that compounds tax-deferred and can be converted to additional income in the future. Other product descriptions focus on features of a single contract rather than the dual-contract setup that simultaneously delivers immediate income and future growth.

The strategy tests balancing guaranteed income with growth by using two annuity contracts, one of which starts payments right away. In a split annuity approach, you convert part of a lump sum into an immediate annuity to provide a guaranteed income stream now (or soon), while the rest is placed into another annuity that defers growth or offers other features. This pairing lets you secure predictable cash flow for current needs while still aiming for growth or additional income later on. For example, you might purchase an immediate lifetime annuity to cover essential expenses, and allocate remaining funds to a deferred annuity that compounds tax-deferred and can be converted to additional income in the future. Other product descriptions focus on features of a single contract rather than the dual-contract setup that simultaneously delivers immediate income and future growth.