Difficulty: Medium

Average Score: 60%

Which of the following guarantees the annuitant CANNOT outlive their benefits?

Rationale

Guaranteed lifetime withdrawal benefits ensure the annuitant CANNOT outlive their benefits.

These benefits provide a steady income for the annuitant for life, regardless of how long they live, thus guaranteeing that they will not outlive their financial resources.

A (Right of survivorship) YOUR ANSWER

This option pertains to ownership rights in joint accounts or properties, where the surviving owner automatically inherits the deceased owner's share. It does not relate to income guarantees for annuitants and therefore does not ensure that an annuitant cannot outlive their benefits.

B (Guaranteed lifetime withdrawal benefits) CORRECT

These benefits specifically assure that the annuitant will receive regular income payments for their lifetime, regardless of the account's investment performance or how long they live. This feature directly addresses the concern of outliving one’s financial resources, making it the correct choice.

C (Guaranteed minimum accumulation benefit) YOUR ANSWER

This benefit ensures that the investment value of the annuity will reach a certain minimum level by a specified time but does not guarantee lifetime income. Therefore, an annuitant could potentially outlive the benefits received from this type of guarantee.

D (Simple income rider) YOUR ANSWER

A simple income rider typically provides a fixed income stream but may not guarantee payments for the duration of the annuitant's life. Depending on the structure, it could lead to situations where the annuitant outlives the income payments, failing to secure lifelong financial support.

Conclusion

Guaranteed lifetime withdrawal benefits are essential for ensuring that annuitants do not outlive their financial resources, providing peace of mind in retirement. Other options, while beneficial in different contexts, do not offer the same assurance of lifelong income, highlighting the importance of understanding income guarantees when selecting an annuity product.

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