An annuity primarily protects an individual against the risk of:
Explanation
An annuity guards against living too long and exhausting one's assets by providing income the annuitant cannot outlive under a life payout option; it is often called the opposite of life insurance. Protecting against premature death is the role of life insurance. Property damage is covered by property insurance, and disability by disability income insurance. The longevity (superannuation) risk is the central risk an annuity is built to address.
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Related questions on this topic
- How does an immediate annuity differ from a deferred annuity?
- An annuitant selects a 'straight life' (life-only) annuity payout option. What is the main trade-off of this choice?
- In an annuity contract, the person whose life expectancy is used to determine the income payments is the:
- A flexible-premium annuity is always a:
- In a fixed annuity, the premiums are held in the insurer's:
- During the accumulation phase of a variable annuity, the owner's payments purchase:
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