New York Insurance Exam Practice Question
What is the primary purpose of an annuity?
Correct Answer: B
Rationale: Annuities are primarily designed to provide a steady stream of income over time, often during retirement. This long-term income feature helps individuals manage their finances and sustain their lifestyle after they stop working.
Option A, providing immediate liquidity, is incorrect as annuities typically involve long-term commitments and are not intended for quick access to funds. Option C, serving as a short-term investment, misrepresents annuities, which are generally long-term financial products. Lastly, option D, covering medical expenses, is too specific; while annuities can be used for this purpose, their main function is income generation rather than funding specific expenses.
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