Which of the following statements is (are)true with regard to an annuity payout option that includes a cost-of-living adjustment?
I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age.
II.Periodic payments to the annuitant are adjusted for inflation.

Question

Quizplus · Accepted Answer

An annuity payout option that includes a cost-of-living adjustment (COLA) typically starts with a lower initial monthly payment compared to a fixed annuity purchased at the same age, because the payments are expected to increase over time to keep up with inflation. This adjustment ensures that the purchasing power of the payments is maintained, making both statements I and II true.

Which of the Following Statements Is (Are)true with Regard to an Annuity