Does an immediate annuity pay at the beginning or the end of the month?

It depends on the contract, and the contract says which. Many immediate annuities pay at the end of each period for the period that has just passed; others pay at the start. The distinction is worth real money if you die early: with payments in arrears, the final partial period may not be paid unless the contract includes a refund or period-certain feature.

Can you change the income start date after you buy?

Generally no once the contract is issued — the payout was priced using the age and rate assumptions at the effective date. Before issue, most carriers let you move the start within the deferred-issue options they offer. After issue, changing the arrangement usually means surrendering the contract and paying the charge, so set the date before you sign.

Do you earn interest while you wait for payments to start?

Sometimes. During a deferred-issue period, some carriers credit interest on the premium until the effective date and others build the wait into the payout instead. Two otherwise identical contracts can therefore differ in what you receive, which is why the deferred-issue credit should be confirmed in writing before you fund.

How long does a 1035 exchange take?

Plan on several weeks. The outgoing insurer must receive the request, calculate the value, and release funds to the new carrier, and each step adds days. Because the exchange is what sets the issue date, it is also what sets your first payment date — so if the timing matters, ask both carriers for their current processing times.

What happens if you die before the first payment?

The contract value normally passes to the beneficiary you named, and the annuity is never annuitised. This is one of the few moments where an annuity behaves like an ordinary asset. It is also why the beneficiary form should be completed and confirmed before funding, not afterwards.

Is there a minimum to start an immediate annuity?

Most carriers set a minimum premium, commonly in the tens of thousands of dollars, and higher minimums apply to some payout options and to deferred income annuities. Minimums vary widely by insurer and state, so confirm the figure with the carrier or quoting service rather than assuming.

Will the payment arrive on the same date every month?

Yes, on a fixed date set when the income begins — often the first or the fifteenth. If that date falls on a weekend or holiday, expect the deposit the preceding business day. The date itself is chosen by the carrier's payment cycle, not by you.

Annuity guide

When Does an Immediate Annuity Start Paying?

"Immediate" describes how the contract is built, not how fast the money arrives. Between signing and the first deposit sit an issue date, an effective date and a payment cycle — and each one quietly changes what you actually receive.

Last updated September 20, 2026 · Reviewed against our editorial methodology

The short answer

Most immediate annuities begin paying within one to three months of the contract being issued, and the wait is set by three things you can control before you sign: the income start date you choose, the time it takes your money to actually move, and the payment cycle the carrier uses.

An "immediate" annuity is one whose income starts soon — in practice, within about twelve months of issue. If you set the start further out than that, most carriers will treat the purchase as a different product, a deferred income annuity, which prices differently. The mechanics of the product itself are on the immediate annuities page; this one is about timing.

The four dates on your contract

Most confusion in this market comes from using one word — "purchase" — for four different events. Find these four dates in your paperwork and the rest of the timeline stops being mysterious.

Date	What it is	Why it matters
Application date	When you sign and submit	Starts the clock; nothing is guaranteed yet
Funding date	When the insurer actually has your money	Usually the real bottleneck in the whole process
Issue date	When the carrier accepts the risk and the contract exists	The rate is locked here; the free-look period starts here
Effective date	The date income begins	Your payout was priced off your age at this date
First payment date	The first deposit, on the carrier's fixed cycle	Can be up to a full cycle after the effective date

Two of those dates are yours to choose. The effective date is the one with the largest effect on the size of the payment, because a payout for a lifetime is calculated from your age on that date. Move it forward and each monthly payment is smaller; move it back and each payment is larger, because the carrier is on the hook for fewer years.

How far out you can push the start

Within the immediate-annuity world, carriers usually offer a handful of preset start dates, often something like one, two, three, six and twelve months after issue. The practical consequences of that menu:

Choosing the earliest option does not mean the money arrives the same week. The clock starts at issue, and issue happens once the insurer holds your funds.
Pushing the start out raises the payment. Partly because you are older at the effective date, and partly because the carrier keeps the premium longer. Whether that trade is worth it is a maths question, not a philosophy question — run it in the annuity calculator before you decide.
Beyond roughly a year, you have left the product. A deferred income annuity is a different contract with different pricing and, often, a different surrender story if you change your mind.
A start date can be timed deliberately. Some people align it with leaving work, with a pension stopping, or with the year they turn in to a required minimum distribution schedule. That last one is a tax-planning question worth taking to a CPA — see our note on how we handle tax material.

A realistic timeline

Illustrative, based on how these transactions typically move rather than on any one carrier's service levels. Treat the right-hand column as the honest range.

Step	Typical time	What makes it longer
Application and suitability paperwork	A few days	Missing signature pages, a state-specific disclosure you have to read and return
Transferring funds from a bank account	1–2 weeks	Wire cut-off times, a cheque in the mail, a hold on a large deposit
IRA rollover into an annuity	2–4 weeks	The custodian's processing queue, a direct versus indirect rollover choice
1035 exchange from an existing contract	3–6 weeks	The outgoing insurer calculating value and releasing funds; paperwork that bounces
Issue date	Days after funds clear	Underwriting, or a carrier that batches issuance
Effective date	Whatever you selected at issue	Nothing — it is fixed once the contract is issued
First payment	Up to one full payment cycle later	A cycle that starts the day after your effective date

Add it up and a purchase that feels finished on the day you sign can still be three months from its first deposit. If you are closing on a house, stopping work, or moving in with family on a specific date, plan the annuity around that date rather than hoping.

Why your first payment is often smaller

A common and harmless surprise: the first cheque is smaller than the one that follows. The reason is arithmetic, not a penalty.

If your effective date falls in the middle of the carrier's payment month, the first period is a fraction of a month. The carrier pays that stub period — sometimes as its own small payment, sometimes folded into the first full one — and then the normal amount starts. So the sequence can look like this: a large gap with no deposit at all, a small payment, then the steady amount you were quoted.

What you should do with that knowledge is budget for it. If your plan depends on the deposit covering a specific bill, hold back one month of expenses until the regular cycle is established. The rates page shows what the quoted monthly amount is likely to be; the paperwork will tell you when it actually lands.

Payment schedule and how the wait changes the amount

Monthly is the default for a reason: it matches how bills arrive. But carriers also offer quarterly, semi-annual and annual payments, and the choice changes the numbers slightly, because a payment made earlier or less often is worth a little more to you than the same annual total dribbling out monthly.

Choice	What happens
Monthly	Smallest per-payment amount, most predictable cash flow
Quarterly, semi-annual or annual	Larger payments, slightly different total value; useful for a tax bill or an annual premium
Deferred-issue start	Bigger payment later; requires funding the gap yourself
Payments in advance versus in arrears	Determines whether the final partial period is paid to your beneficiary

The in-advance-versus-in-arrears line is the one almost nobody raises at the point of sale, and it is the one that decides whether a beneficiary receives a final payment. Ask which applies to the contract you are being shown.

What has to be in place before the money moves

Nothing here is exotic, and every item is a documented reason a first payment slipped.

Direct deposit or ACH details, confirmed. A mailed cheque adds days to every single payment, forever.
A beneficiary form, completed and acknowledged. The form that matters most is the one most people skip.
A tax withholding election. An annuity paid from an IRA generally has withholding by default; a non-qualified annuity lets you elect it. The election form for federal withholding is IRS Form W-4P.
The payout option, initialled. Life only, life with a period certain, joint and survivor, and refund options all produce different amounts, and the option is effectively permanent once income starts.
A written confirmation of the effective date and the first payment date. Not a verbal estimate from a sales call.

The free-look window

Every state gives you a period after issue — commonly ten to thirty days — during which you can return the contract and have your premium released. The clock runs from the issue date, not the first payment date, so a contract with a deferred start can spend most of its free-look window before you see a dollar.

Practically: read the contract during that window, not after it. Confirm the effective date, the first payment date, the surrender terms, and the payout option. If something is wrong, the free-look period is the cheapest moment you will ever have to fix it.

Six things to confirm before you sign

What the issue date is expected to be, given how your money is moving.
The effective date you selected, and whether interest is credited until then.
The exact first payment date, in writing.
Whether payments are made in advance or in arrears.
What happens to a partial final period if you die early.
How long the free-look window is in your state and when it started.

If a producer cannot answer all six, that is not a paperwork problem — it means the conversation is not finished, and you should not be funding the contract yet.

Frequently asked questions

Does an immediate annuity pay at the beginning or the end of the month?: It depends on the contract, and the contract says which. Many immediate annuities pay at the end of each period for the period that has just passed; others pay at the start. The distinction is worth real money if you die early: with payments in arrears, the final partial period may not be paid unless the contract includes a refund or period-certain feature.
Can you change the income start date after you buy?: Generally no once the contract is issued — the payout was priced using the age and rate assumptions at the effective date. Before issue, most carriers let you move the start within the deferred-issue options they offer. After issue, changing the arrangement usually means surrendering the contract and paying the charge, so set the date before you sign.
Do you earn interest while you wait for payments to start?: Sometimes. During a deferred-issue period, some carriers credit interest on the premium until the effective date and others build the wait into the payout instead. Two otherwise identical contracts can therefore differ in what you receive, which is why the deferred-issue credit should be confirmed in writing before you fund.
How long does a 1035 exchange take?: Plan on several weeks. The outgoing insurer must receive the request, calculate the value, and release funds to the new carrier, and each step adds days. Because the exchange is what sets the issue date, it is also what sets your first payment date — so if the timing matters, ask both carriers for their current processing times.
What happens if you die before the first payment?: The contract value normally passes to the beneficiary you named, and the annuity is never annuitised. This is one of the few moments where an annuity behaves like an ordinary asset. It is also why the beneficiary form should be completed and confirmed before funding, not afterwards.
Is there a minimum to start an immediate annuity?: Most carriers set a minimum premium, commonly in the tens of thousands of dollars, and higher minimums apply to some payout options and to deferred income annuities. Minimums vary widely by insurer and state, so confirm the figure with the carrier or quoting service rather than assuming.
Will the payment arrive on the same date every month?: Yes, on a fixed date set when the income begins — often the first or the fifteenth. If that date falls on a weekend or holiday, expect the deposit the preceding business day. The date itself is chosen by the carrier's payment cycle, not by you.