What term describes a contract that provides income for a specified period of years, or for life?

What term describes a contract that provides income for a specified period of years, or for life?

• A. Suitability
• B. Annuity
• C. Owner
• D. Beneficiary

Answer: (B)

Annuity is a contract with an insurer that guarantees a stream of payments in exchange for funds today or over time. The defining feature is the payout option: you can set it to provide income for a fixed number of years or for the rest of the annuitant’s life. This makes it a common tool for retirement income, helping to cover expenses regardless of how long you live. Payouts can be fixed or, in some types, vary with investment performance. The other terms describe roles or processes (who owns the contract, who benefits, or whether the product fits a client’s needs) rather than the contract’s purpose—which is to provide a steady income stream.

Annuity is a contract with an insurer that guarantees a stream of payments in exchange for funds today or over time. The defining feature is the payout option: you can set it to provide income for a fixed number of years or for the rest of the annuitant’s life. This makes it a common tool for retirement income, helping to cover expenses regardless of how long you live. Payouts can be fixed or, in some types, vary with investment performance. The other terms describe roles or processes (who owns the contract, who benefits, or whether the product fits a client’s needs) rather than the contract’s purpose—which is to provide a steady income stream.