Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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Jane purchases a 15-year temporary annuity certain contract. When she retires at age 75, she begins receiving her annuity payments. When Jane reaches 90 years of age, what will happen to her annuity?
  1. She will continue to receive her payments until her death
  2. She will no longer receive any more payments
  3. She will receive payments at a decreased amount
  4. She will receive payments at an amount determined by the market value.
Explanation
Answer: B - When Jane reaches 90 years of age, her 15 year temporary annuity certain contract will be considered complete and she will no longer receive payments. Unlike the life annuity with period certain, a temporary annuity certain contract expires after the set number of years. The specified number of years is typically 10, 15 or 20 years. If Jane were to die before her 15 years were paid in full, her beneficiary would receive the remainder of those payments.
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