Utah Life Producer Practice Exam

Question: 1 / 400

What is a common purpose of an annuity?

To provide a lump sum payment at retirement

To ensure lifelong income

Annuities are primarily designed to provide a steady income stream, often during retirement, ensuring that the individual has access to funds for the entirety of their lifetime. This feature is particularly beneficial for retirees who are concerned about outliving their savings. With an annuity, an individual can convert a lump sum of money into regular payments, which can be structured to last for a specified period or for the individual's lifetime.

This characteristic of ensuring lifelong income is one of the main attractions of annuities, differentiating them from other financial instruments. They can be structured in various ways, though the core purpose remains anchored in providing a guaranteed income, which helps individuals budget and plan for their financial needs in retirement. This aspect is particularly crucial in addressing the risk of longevity, which is becoming a more significant concern as life expectancies increase.

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To generate high-risk investment returns

To provide short-term liquidity

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