Series 7 Exam Question 64: Answer and Explanation

Question: 64

Which of the following types of annuity payout options provide the investor with the highest periodic returns?

• A. Life annuity
• B. Life annuity with period certain annuity
• C. Joint and last survivor annuity
• D. None of the above

Correct Answer: A

Explanation:

A. Life annuities provide the highest periodic payments because once the investor dies, the insurance company is off the hook and doesn't have to pay any other person. Because it's riskiest for the investor, it pays the highest periodic payment.