Washington Life Producer Practice Exam

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?

1. Life annuity

2. Fixed annuity

3. Life annuity certain

4. Variable annuity

The correct answer is: Life annuity certain

A life annuity certain is a type of annuity that guarantees a series of income payments for a specified period, regardless of whether the annuitant survives the entire duration. This means that the annuitant will receive the agreed-upon payments for a set number of years, ensuring that if they pass away before the term is completed, the remaining payments will still be made to their beneficiaries. This structure provides financial security, as it guarantees that some benefit will be paid out, which can be particularly appealing to individuals who want to ensure that their investment yields returns, even if they do not live to receive all the payments themselves. Unlike a regular life annuity that ceases to pay upon the death of the annuitant, a life annuity certain offers that additional layer of assurance regarding the payment period. Understanding the nature of the payments associated with various annuities is crucial for making informed financial decisions, particularly when planning for retirement income or estate considerations.