Question

One of the disadvantages of taking systematic withdrawals, in addition to the annuity payments, from an annuity is that:

a. the contract owner loses control of the annuity fund.
b. the contract owner cannot benefit from increases in the interest rates credited to the annuity fund.
c. if the contract owner dies shortly after withdrawals begin, the annuity's value to heirs is lost.
d. the contract owner is not guaranteed that annuity income will last for his or her lifetime.

Answer 1

One disadvantage of taking systematic withdrawals from an annuity is that there is no guarantee of a lifetime income. So, the correct answer is option d.

Step-by-step explanation:

One of the disadvantages of taking systematic withdrawals from an annuity in addition to the annuity payments is that the contract owner is not guaranteed that the annuity income will last for his or her lifetime. Unlike annuity payments, where the income is guaranteed for life, systematic withdrawals do not provide a lifetime income guarantee. This means that if the contract owner lives longer than expected or experiences poor investment returns, they may run out of money before their lifetime.

So, the correct answer is option d.