Washington Life Producer Practice Exam

Which annuity type provides payments to the beneficiary after the death of the annuitant?

1. Refund annuity

2. Graduated annuity

3. Fixed annuity

4. Life annuity

The correct answer is: Refund annuity

The correct answer is a refund annuity, which is designed to provide a death benefit to a beneficiary after the annuitant's death. In a refund annuity arrangement, if the annuitant passes away before receiving an amount equal to the total contributions made into the annuity, the remaining funds are either paid out as a lump sum or through an installment payment to the designated beneficiary. This ensures that the annuitant's initial investment is not forfeited upon their death, adding an element of financial security for their beneficiaries. In contrast, a graduated annuity typically involves increasing payment amounts over time, but does not specifically include a death benefit clause that guarantees payments to a beneficiary after the death of the annuitant. A fixed annuity provides a consistent, predetermined payment to the annuitant during their lifetime but does not automatically offer payment to a beneficiary after death. A life annuity, while it guarantees payments for the annuitant's lifetime, generally ceases upon their death, meaning no further payments are made to beneficiaries.