Which annuity option guarantees payments for the life of the annuitant with a guaranteed period?

Which annuity option guarantees payments for the life of the annuitant with a guaranteed period?

• A. Life Income Period Certain
• B. Life Income (Pure or Straight Life)
• C. Life Income with Refund
• D. Life Income Joint & Survivor

Answer: (A)

Life Income Period Certain is the option that guarantees payments for the life of the annuitant while also guaranteeing a minimum number of years of payments. The key idea is that you get payments for life, but if you die before the guaranteed period ends, the remaining payments continue to a beneficiary for the rest of that period. If the annuitant outlives the period, payments simply continue for life as long as the contract is in force. This differs from a pure Life Income, which pays only while the annuitant is alive and ends at death without any period guarantee. It also differs from Life Income with Refund, which guarantees a return of premium or a refund if death occurs early, but does not tie the guarantee to a period of payments in the same way. And Joint & Survivor changes who receives payments after death, rather than guaranteeing a fixed period for the original annuitant. So, the option that matches “guarantees payments for the life of the annuitant with a guaranteed period” is Life Income Period Certain.

Life Income Period Certain is the option that guarantees payments for the life of the annuitant while also guaranteeing a minimum number of years of payments. The key idea is that you get payments for life, but if you die before the guaranteed period ends, the remaining payments continue to a beneficiary for the rest of that period. If the annuitant outlives the period, payments simply continue for life as long as the contract is in force.

This differs from a pure Life Income, which pays only while the annuitant is alive and ends at death without any period guarantee. It also differs from Life Income with Refund, which guarantees a return of premium or a refund if death occurs early, but does not tie the guarantee to a period of payments in the same way. And Joint & Survivor changes who receives payments after death, rather than guaranteeing a fixed period for the original annuitant.

So, the option that matches “guarantees payments for the life of the annuitant with a guaranteed period” is Life Income Period Certain.