What risk does an individual who purchases a Life annuity protect against?

An individual who purchases a life annuity primarily protects against the risk of outliving their savings. Life annuities are designed to provide a steady stream of income for the lifetime of the annuitant, which means that regardless of how long a person lives, they will continue to receive payments. This is particularly beneficial for individuals who are concerned about running out of funds during retirement, as it ensures financial security throughout their lifetime.

The other choices may raise valid concerns in various contexts, such as the loss of income during periods of unemployment, inflation affecting the purchasing power of fixed income, and market volatility impacting investments. However, these concerns do not directly address the primary purpose of a life annuity, which specifically counters the risk of longevity - the chance of living longer than one's savings can support. Thus, the key function of a life annuity is to mitigate the impact of outliving one's financial resources, making it an essential tool for retirement planning.