Enrolled Actuary Exam Prep

Category - Enrolled Actuary

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Smith has the option of receiving a benefit in the form of an annuity beginning in one year.The annuities, each of which is actuarially equivalent, are:Option 1 A life annuity of $1,000 per yearOption 2 A life annuity of X per year, decreasing to 50% of X payable to Smith’s spouse after Smith’s death Option 3 A life annuity of $875 per year, payable while either Smith or Smith’s spouse is aliveIn what range is X?

Less than $920
$920 but less than $925
$925 but less than $930
$930 but less than $935
$935 or more

Explanation

Answer: D - $930 but less than $935

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