An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began?

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Hudson

20 January, 08:48

An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began?

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Luke Duncan · Answer 1

The beneficiary should receive 6 more years of payment.

Explanation:

An annuity certain option guarantees that the insured or his/her beneficiaries will receive payments for a minimum period of time in case the insured dies.

In this question the certain option was 10 years, during the first 4 years the insured received his/her annuity payments, but once the insured passed away, his/her beneficiaries will continue to receive payments until the 10 year period ends (6 more years).