Which of the following best describes the beneficiary feature of a Life Annuity with Period Certain?

• A. The beneficiary receives payments for the remainder of the period if the annuitant dies early
• B. There is no beneficiary; payments stop at death
• C. The beneficiary receives a single lump-sum payment upon death
• D. The payments extend for life to the beneficiary after the annuitant dies

Answer: (A)

In a Life Annuity with Period Certain, you choose a guaranteed payoff period. The purpose is to provide income for a set time, even if the annuitant dies early. If death occurs before that guaranteed period ends, the payments continue to a designated beneficiary for the remainder of the period. If the annuitant lives through the entire period, payments continue to the annuitant as scheduled and there’s no extra benefit to the beneficiary afterward.

That’s why the correct idea is that the beneficiary receives payments for the remaining portion of the guarantee period if the annuitant dies early. The other options don’t fit because there is, in this arrangement, a beneficiary for the remainder of the period (not a lump sum on death, and not payments that extend for life to the beneficiary).