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As an advisor that sometimes sells annuities, I would agree with your conclusion.

If they need immediate income (which is what an immediate annuity is designed to do), it is typically to replace or duplicate a pension.

Pensions don't generally fluctuate their payments - except to occasionally give a small increase due to inflation or cost of living (depending on the company).

An equity indexed annuity - which is what this sounds like - is more for accumulation than it is for distribution.

If they need immediate guaranteed income, I would look to a company that has a policy specifically for such. I would also look for the option of "period certain" so that if both parents go early, the estate doesn't lose those payments for a few years.
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