Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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What is the main difference between a refund life annuity and a life annuity?
  1. Refund life annuity guarantees more than the amount spent on the annuity purchase price
  2. Life annuity guarantees more than the minimum amount spent on the annuity purchase price
  3. Refund life annuity guarantees the annuitant will receive an amount at least equal to the purchase price.
  4. Life annuity guarantees the annuitant will receive an amount at least equal to the purchase price on the annuity
Explanation
Answer: C - A refund life annuity guarantees the annuitant will receive an amount at least equal to the purchase price of the annuity. Therefore if the annuitant lives for a long time, they would receive additional benefits beyond the contract costs. If death occurs prior to the purchase amount being paid out, the beneficiary receives the payments.
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