Which statement describes a life income (pure or straight life) annuity?

Which statement describes a life income (pure or straight life) annuity?

• A. Annuity payments are guaranteed for a fixed period regardless of life.
• B. Annuity payments increase with inflation.
• C. Annuity payments stop at death.
• D. Annuity payments continue for as long as the annuitant lives; payments stop at death.

Answer: (D)

Pure or straight life annuities are designed to provide income for the recipient’s lifetime, with payments continuing while the annuitant is alive and stopping at death. This definition matches the statement that payments continue for as long as the annuitant lives and stop at death. It contrasts with fixed-period arrangements that guarantee payments for a set number of years regardless of whether the person is alive, and with options that describe inflation adjustments rather than how long payments last. The brief note that payments stop at death is true, but it doesn’t alone convey the lifetime nature of the payout.

Pure or straight life annuities are designed to provide income for the recipient’s lifetime, with payments continuing while the annuitant is alive and stopping at death. This definition matches the statement that payments continue for as long as the annuitant lives and stop at death. It contrasts with fixed-period arrangements that guarantee payments for a set number of years regardless of whether the person is alive, and with options that describe inflation adjustments rather than how long payments last. The brief note that payments stop at death is true, but it doesn’t alone convey the lifetime nature of the payout.