West Virginia State Life Insurance Practice Exam

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Study for the West Virginia State Life Insurance Exam. Utilize flashcards and multiple choice questions with hints and explanations. Prepare to ace your exam!

Practice this question and more.

What is a common function of an annuity?

To provide a lump sum payment at death
To offer a guaranteed income stream during retirement
To protect against market losses
To cover long-term healthcare costs

The correct answer is: To offer a guaranteed income stream during retirement

An annuity is primarily designed to offer a guaranteed income stream during retirement, which is essential for individuals planning their financial future. This structure allows annuity holders to receive consistent payments over a specified period or for the remainder of their lives, which can help prevent outliving their savings. The predictability of income that comes with annuities provides a sense of financial security, making it easier for retirees to budget their living expenses. While other financial products and insurance can serve functions such as providing lump-sum death benefits, protecting investments from market fluctuations, or covering long-term healthcare costs, these are not the primary purpose of annuities. Annuities are specifically tailored to address the need for stable income, making them a popular choice for retirement planning.