What is true regarding annuities?
A) They only benefit you if you live longer than expected.
B) They give you variable returns and a higher rate of return.
C) They are less risky than the stock and bond markets because they let you know what your monthly income will be.
D) They only benefit you if you don't retire.
E) They usually benefit the insurance company more than they benefit you.

Question

Quizplus · Accepted Answer

Insurance companies offer people the ability to buy annuities, with the insurance company guaranteeing the payments for a specific period of years, most often the life of the annuitant (the person receiving the annuity). If you retire, you wouldn't want to take a risk in the stock and bond markets, and you would like to know what your monthly income would be. If you have a retirement account worth $1 million, and the life insurance company guarantees you a 5 percent return for life, you could receive an annual payment of $83,870. Given that financial returns are volatile from one year to the next, you have exchanged variable returns for stable returns and have probably taken a lower rate of return than you could have gotten by having an investment advisor managing your money.

What Is True Regarding Annuities