The correct answer is: A. Risk of longevity is best managed through pensions.
Pensions are a type of retirement plan that provides income to retirees. They are funded by employers and employees, and they can be either defined benefit or defined contribution plans. Defined benefit plans promise a certain level of income in retirement, while defined contribution plans promise to contribute a certain amount of money to the plan each year.
Pensions can help to manage the risk of longevity by providing a guaranteed income stream in retirement. This can be important for retirees who may outlive their savings. Pensions can also help to manage the risk of inflation by providing an income that is adjusted for inflation.
Early death can be handled through life insurance, which provides a lump sum payment to beneficiaries upon the death of the insured person. Investment risk can be addressed through a variety of investment strategies, such as diversification and asset allocation. Inflation risk can be managed through inflation-protected investments, such as Treasury Inflation-Protected Securities (TIPS).
Therefore, the correct answer is: A. Risk of longevity is best managed through pensions.