Florida Life and Health Insurance License Practice Test

An annuity primarily provides a regular stream of income, particularly during retirement, making it a popular financial product for individuals seeking to ensure that they have a consistent source of funds after they stop working. When individuals invest in an annuity, they typically make a lump-sum payment or a series of payments to an insurance company, which then disburses payments back to them over a specified period or for the remainder of their life.

This feature is particularly beneficial for retirees who may not have a steady income source and need assurance that they will have funds available to cover their living expenses. Annuities can be structured in various ways, such as immediate or deferred, but regardless of the structure, the core purpose remains the same: to convert a sum of money into a predictable income stream.

The other options do not encapsulate the primary purpose of an annuity. While a one-time lump-sum payment may occur with certain types of financial products, it does not align with the fundamental concept of an annuity which inherently revolves around ongoing income. Similarly, a fixed interest savings account does not provide the same structured income flow or investment in exchange for a steady payout. Finally, while providing a single payment to a beneficiary upon death is a feature of certain types