Which description best defines a life annuity with a guaranteed number of payments, regardless of survival?

Which description best defines a life annuity with a guaranteed number of payments, regardless of survival?

• A. A lifetime income with no guarantee
• B. A lifetime payment that ends at death
• C. A guaranteed number of payments, regardless of survival
• D. A payment that continues to heirs

Answer: (C)

A life annuity with a guaranteed number of payments is a period-certain type of life annuity. It promises a fixed number of payments will be made, no matter what happens with the insured’s survival. That means you’ll receive those payments for the entire guaranteed period even if you die early; if the contract design includes a beneficiary, any remaining guaranteed payments can pass on to that beneficiary. This is different from a pure life annuity, which pays for as long as you live and stops at death without a guaranteed tail. So the description that literally states a guaranteed number of payments, regardless of survival, best captures the concept.

A life annuity with a guaranteed number of payments is a period-certain type of life annuity. It promises a fixed number of payments will be made, no matter what happens with the insured’s survival. That means you’ll receive those payments for the entire guaranteed period even if you die early; if the contract design includes a beneficiary, any remaining guaranteed payments can pass on to that beneficiary. This is different from a pure life annuity, which pays for as long as you live and stops at death without a guaranteed tail. So the description that literally states a guaranteed number of payments, regardless of survival, best captures the concept.