Which of the following annuities will pay benefits for the life of two individuals, continuing until both have died?

Rationale

Joint and survivor annuity pays benefits for the life of two individuals, continuing until both have died.

This type of annuity ensures that payments are made to both individuals throughout their lifetimes, stopping only when the last surviving person passes away. It provides financial security for couples by guaranteeing a steady income for as long as either individual is alive.

A (Joint and survivor annuity) CORRECT

This annuity is specifically designed to provide benefits for two individuals, ensuring that payments continue until both have passed away. It is structured to support the financial needs of couples, making it the correct choice for the question posed.

B (Fixed annuity) YOUR ANSWER

A fixed annuity provides a guaranteed payout to the annuitant for a specified period or for their lifetime, but it does not cater to two individuals simultaneously. This type of annuity typically ends with the death of the annuitant, thus failing to meet the requirement of paying benefits until both individuals have died.

C (Refund annuity) YOUR ANSWER

A refund annuity guarantees a return of the principal to beneficiaries if the annuitant dies before a predetermined period has elapsed. While it offers some financial protection, it does not provide ongoing payments for the lifetime of two individuals, making it unsuitable for the question's criteria.

D (Straight life annuity) YOUR ANSWER

A straight life annuity provides payments for the lifetime of one individual only, terminating upon their death. It lacks the provision for continued payments to a second individual, thereby not fulfilling the requirement of paying benefits until both have died.

Conclusion

The joint and survivor annuity is uniquely positioned to meet the needs of two individuals, offering benefits throughout their lifetimes and ceasing only after both have died. Other annuity types, while providing various financial structures, do not accommodate the specific requirement of covering two lives concurrently. This distinction makes the joint and survivor annuity the most suitable choice for the question.

Which of the following annuities will pay benefits for the life of two individuals, continuing until both have died?

Joint and survivor annuity pays benefits for the life of two individuals, continuing until both have died.

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