What characterizes immediate annuities in terms of premium payment?

Immediate annuities are characterized by being funded with single premiums. This means that the policyholder pays a lump sum amount upfront to purchase the annuity. Once this single premium is paid, the annuity begins to make periodic payments to the annuitant immediately, typically within a year. This structure is designed to provide a steady income stream right away, which can be particularly useful for retirees or individuals looking for immediate cash flow.

The other options do not accurately describe immediate annuities. For instance, requiring payments over time suggests a structured payment plan, which aligns more with deferred annuities rather than immediate ones. Although immediate annuities can provide guaranteed returns depending on the contract, this characteristic is not exclusive to them, as other investment products may also offer guaranteed returns. Lastly, the concept of variable premium payments does not apply to immediate annuities since they are funded with a single upfront payment and do not involve ongoing premium payments.