Annuities
Which payout option produces the largest periodic income for a given sum, and why?
Answer and explanation
Answer: B. A pure or straight life option pays only while the annuitant lives, so nothing is set aside for a guarantee and each payment can be larger. Every added guarantee, whether a period certain, a refund, or a second life, reduces the periodic amount.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, pure life versus life with guaranteed minimum
More annuities questions
- How does a fixed indexed annuity credit interest?
- In an annuity contract, whose life measures the income payments?
- The index referenced by a fixed indexed annuity falls sharply in a year. What ordinarily happens to the contract value?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
- What characterizes a single premium immediate annuity?
- What distinguishes an annuity certain from a life contingency option?
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