Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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Sarah purchases a life annuity with period certain contract for 10 years. At age 70, Sarah retires and begins receiving her annuity payments. After her 76th birthday, Sarah dies. What will happen to Sarah’s annuity payments?
  1. The insurance company will receive them and apply them to surplus
  2. The insurance company will apply a surrender charge and give the rest to her estate
  3. The beneficiary will receive the payments less 50%
  4. The beneficiary will receive the payments for the remaining 4 years.
Explanation
Answer: D - If Sarah dies before her life annuity period certain contract is fulfilled, the remaining payments will go to the beneficiary she established when the contract was written. Therefore with four years left, the beneficiary will receive these payments. Period certain annuities will pay the entire period before being considered complete.
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