NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Comparison of Products Across Categories
Which product is generally most suitable for a client who needs a regular, predictable lifelong income after retirement and wants to transfer longevity risk to another party?
An immediate annuity from a life insurer suits this need, because it converts a lump sum into a regular income for life and transfers longevity risk to the insurer. The other options give variable or time-limited returns and do not protect against outliving savings.
- AAn immediate annuity from a life insurerCorrect
- BA small-cap equity mutual fund
- CA listed REIT unit
- DA 3-year bank deposit
Explanation
An immediate annuity pays a regular income for life (or a set term) and shifts longevity risk to the insurer. Small-cap funds and REITs have variable returns and no longevity protection, and a 3-year deposit ends after its term.
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