Final answer:
Immediate annuities can provide a lifetime payout, contrary to the statement provided in the question.
Step-by-step explanation:
An immediate annuity is a financial product that provides regular income payments to the annuitant starting immediately after the purchase of the annuity. It is a type of insurance contract sold by insurance companies. The annuity payments can be fixed or variable, and they can be structured to provide income for a specific number of years or for the lifetime of the annuitant.
One common misconception about immediate annuities is that they cannot provide a lifetime payout. However, this statement is not true. Immediate annuities are often used as a retirement income vehicle because they can provide a guaranteed income stream for the rest of the annuitant's life. The annuity payments continue as long as the annuitant is alive, ensuring a lifelong source of income.
Immediate annuities are a popular choice for individuals who want a predictable and stable income during retirement. By converting a lump sum of money into an immediate annuity, individuals can ensure they will receive regular income payments for the rest of their lives, regardless of how long they live.