What is the primary reason for buying an annuity?

• A. Provide life-long income
• B. Reduce investment risk
• C. Provide future economic security
• D. Hedge against inflation

Answer: (C)

Annuities are designed to turn a lump sum into a steady stream of payments scheduled for the future, providing a predictable income in retirement. The main idea is to create future economic security, so you don’t outlive your savings and can cover living expenses even if market conditions are uncertain. While lifetime income can be a feature of many annuities, the overarching purpose is to ensure a stable financial footing for the future. Reducing investment risk and hedging against inflation can be benefits of certain products or riders, but they aren’t the primary reason people buy annuities; standard contracts don’t automatically guarantee inflation protection and aren’t primarily about risk reduction.