Judy has $500,000 with which to purchase a single-premium annuity. Which annuity should she buy if she wants to maximize her monthly liquidation payment?

Question

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A straight life annuity provides the highest monthly payment compared to other types of annuities because it does not offer any guarantees or benefits to a beneficiary. Therefore, the insurer can pay higher monthly payments to the annuitant since there is no obligation to continue payments after the annuitant's death. Other types of annuities may offer death benefits or survivor options, which decrease the monthly payment amount. Since Judy wants to maximize her monthly liquidation payment, a straight life annuity would be the best choice.

Judy Has $500,000 with Which to Purchase a Single-Premium Annuity