An annuity that guarantees a lifetime income to the recipient is known as what?

The term for an annuity that guarantees a lifetime income to the recipient is typically referred to as an immediate annuity. This type of annuity starts paying out income almost immediately after the investment is made, providing a steady income stream for the duration of the annuitant's life.

In immediate annuities, the payments begin relatively quickly, within one year of purchase, thereby ensuring that the recipient can rely on this source of income to fulfill their financial needs. This feature makes it particularly attractive for individuals seeking stable, predictable income during retirement or in similar situations.

Deferred annuities, by contrast, accumulate funds over time and only begin to pay out the income later on, which means they do not provide immediate guarantees of lifetime income. Equity index annuities involve returns based on a stock market index, with both growth potential and a degree of protection against loss. Fixed annuities offer guaranteed payments as well, but they do not necessarily start paying out immediately.

Therefore, the most accurate description of an annuity that guarantees a lifetime income is indeed an immediate annuity.