Texas Life Agent Practice Exam

A customer interested in retirement income at age 65 would NOT purchase which of the following?

1. Deferred annuity

2. Immediate annuity

3. Variable annuity

4. Fixed annuity

The correct answer is: Immediate annuity

A customer interested in retirement income at age 65 would typically not purchase an immediate annuity because immediate annuities are designed to start providing income payments almost immediately after a lump sum payment is made. This is suitable for individuals who are looking to convert a portion of their retirement savings into a predictable income stream very soon after purchasing the annuity. When considering retirement income at age 65, individuals are often looking for options that allow for some form of deferral or growth potential prior to beginning to take distributions. A deferred annuity, variable annuity, or fixed annuity can be more appropriate for a customer who still wants to accumulate funds before they begin receiving income payments. In contrast, an immediate annuity starts paying out at the time of purchase, which may not align with the customer's retirement income planning if they prefer to have funds grow first or are not yet ready to rely on that income. This makes the immediate annuity less suitable for someone planning for retirement income specifically starting at that age when compared to the other options available.