Massachusetts Insurance Laws and Rules Practice Test

A business may purchase an annuity for several key financial strategies, including funding retirement plans, informally funding non-qualified deferred compensation plans, and providing employee benefits. Each of these options leverages the insurance product’s strengths, such as guaranteed income and tax-deferred growth, to enhance employee satisfaction and financial security.

When it comes to enhancing business credit ratings, annuities do not play a direct role. Business credit ratings are primarily influenced by factors such as payment history, credit utilization, length of credit history, and overall financial health of the company. An annuity does not directly contribute to these metrics and therefore would not be used to enhance a company’s creditworthiness.

Thus, choosing to pursue an annuity for the purpose of improving business credit ratings would be considered unrelated to the primary financial objectives of acquiring an annuity.