New Jersey Life and Health State Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

An annuity is primarily designed to provide a steady stream of income, especially during retirement, which aligns with the fundamental purposes of enabling financial security in one's later years. It serves functions such as offering retirement income and protecting against longevity risk, which is the risk of outliving one's savings.

Annuities also provide the benefit of tax-deferred growth, allowing investments to grow without immediate tax implications until withdrawals begin. However, creating an estate is not typically a primary function of an annuity. While individuals may have the opportunity to designate beneficiaries and potentially transfer leftover funds upon death, the core purposes of annuities do not include estate creation. Instead, their main focus is on income generation and protection from financial risks associated with longevity. Therefore, creating an estate does not align with the primary objectives of what an annuity aims to achieve.