Maryland Life and Health Insurance License Practice Exam

Which annuity payout option makes no additional payments regardless of the annuitant's death?

1. Life only

2. Joint and survivor

3. Period certain

4. Fixed period

The correct answer is: Life only

The life only payout option is designed to provide payments exclusively for the lifetime of the annuitant. Once the annuitant passes away, the payments cease entirely, and no further disbursements are made to beneficiaries. This option maximizes monthly payouts to the annuitant during their lifetime, but it does not include any provision for additional payments upon the death of the annuitant. In contrast, the other options may provide benefits or payments beyond the annuitant’s life. For example, joint and survivor options ensure payments continue as long as either of the two designated individuals is alive. The period certain and fixed period options guarantee payments for a specified period, which could also extend past the annuitant's life if they pass away before that time ends, allowing beneficiaries to receive payments. The life only option stands out in that its payments stop completely at the death of the annuitant, making it a straightforward choice if one requires only lifetime income without any subsequent benefits for heirs.