Which type of annuity will provide Erik with the highest monthly payment for a $50,000 investment?

A straight life annuity is designed to provide the highest monthly payments compared to other types of annuities for a given investment amount. When Erik invests $50,000 in a straight life annuity, he will receive regular payments for as long as he lives. This type of annuity does not make payments to any beneficiaries after his death, so the entire amount invested is utilized to maximize his monthly income during his lifetime.

In contrast, other annuity options either provide payments for a set period or include additional features that reduce the monthly payment amount. For example, a joint life annuity pays out benefits for the lives of two individuals, which typically results in smaller monthly payments to account for the extended payout period. A term certain annuity guarantees payments for a specified term, such as ten or twenty years, meaning it may provide less in monthly payments if the term is shorter than the individual's life expectancy. A deferred annuity, on the other hand, starts paying after a specified accumulation period, which means Erik would not receive immediate income from his investment.

Thus, the straight life annuity is optimal for Erik if his primary goal is to maximize his monthly payment from a $50,000 investment.