What is a primary purpose of an annuity?

The primary purpose of an annuity is to provide retirement income. Annuities are financial products designed to accumulate funds for retirement and then generate a steady income stream during retirement. They are particularly advantageous as they can offer individuals a reliable and predictable source of income, which helps ensure financial stability in their later years.

While annuities may also have some tax benefits associated with their growth and distribution, the fundamental design and intent of an annuity is focused on retirement planning. They are structured to convert a lump sum of money into periodic payments, which can be crucial for sustaining living expenses after one has stopped working.

Other options listed, such as paying for education expenses or covering health insurance premiums, do not align with the primary function of annuities, as these products are specifically geared toward facilitating a secure financial environment during retirement.