Which of these is NOT considered to be a purpose of an annuity?

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Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

Multiple Choice

Which of these is NOT considered to be a purpose of an annuity?

Explanation:
Annuities are designed to turn a lump sum into a steady stream of payments, either for retirement income or to spread out payments over time, and they also offer tax-deferred growth as a savings tool. They are not used to create an estate; life insurance, not an annuity, is the typical tool for providing funds to heirs. So the statement that an annuity is intended to create an estate is the one that doesn’t fit as a purpose of an annuity. The other purposes—providing retirement income, serving as a savings tool, and distributing funds over time—are all valid uses.

Annuities are designed to turn a lump sum into a steady stream of payments, either for retirement income or to spread out payments over time, and they also offer tax-deferred growth as a savings tool. They are not used to create an estate; life insurance, not an annuity, is the typical tool for providing funds to heirs. So the statement that an annuity is intended to create an estate is the one that doesn’t fit as a purpose of an annuity. The other purposes—providing retirement income, serving as a savings tool, and distributing funds over time—are all valid uses.

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