Which sister is likely to receive the highest monthly payment by purchasing an annuity?

In the context of purchasing annuities, the decision regarding the type of annuity affects the payment amounts received. A straight life annuity provides payments for the lifetime of the annuitant, typically leading to higher monthly payments compared to joint life annuities, which are designed to cover two people and generally result in lower payments because the insurance company anticipates making payments for a longer duration.

When considering options that involve purchasing a straight life annuity, the monthly payments are based solely on the life expectancy of the individual purchasing the annuity. This means an individual can receive larger payments since the risk is confined to one life rather than shared between two lives in a joint life annuity scenario.

In this case, Rebecca is likely to receive the highest monthly payment by choosing a straight life annuity since it optimizes her potential payouts based on her life expectancy without the burden of spreading those payments across another person's life. The nature of straight life annuities focuses the entire risk and payout on one person, making them generally more lucrative in terms of monthly payment than joint life options.