What type of annuity contract makes its first pay-out 12 months after purchase?

A deferred annuity is a type of contract where the first payout occurs after a specified deferral period, which is typically several years or, in the context of the question, 12 months after purchase. This deferral period allows the money invested in the annuity to grow on a tax-deferred basis, meaning that the account can accumulate value without being taxed until withdrawals are made.

In this case, after the 12-month waiting period, the policyholder will begin to receive payments, making it an appealing choice for individuals who want to set aside funds for future income, such as retirement. The ability to delay payouts while enjoying tax-deferred growth is a significant advantage of deferred annuities, making them suitable for long-term financial planning.

Immediate annuities, on the other hand, start paying out almost immediately after the initial investment, which is not the case here. Variable and indexed annuities can also be either immediate or deferred; however, the emphasis here is on the specific nature of the deferred annuity regarding the scheduled start of payouts.