Products & Their RisksQuestion 80 of 398
A 68-year-old retiree wants guaranteed lifetime income and cannot tolerate any loss of principal. Which product is most suitable?
a.A variable annuity invested aggressively in equity subaccounts
b.A leveraged sector ETF
c.A direct participation program in oil and gas exploration
d.A fixed annuity providing a guaranteed income stream for life
Explanation
A fixed annuity offers a guaranteed rate and a guaranteed lifetime income stream with no market risk to principal, matching the retiree's need for safety and predictable income. A variable annuity or leveraged ETF exposes principal to market loss, and a DPP is illiquid and speculative, making them unsuitable here.
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Related questions on this topic
- In a fixed annuity, who bears the investment risk?
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- An equity-indexed annuity typically credits interest based on:
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- Which statement about the two phases of an annuity is correct?
- A variable life insurance policy is considered a security because:
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