Question 89

A life annuity ceases payments to the annuitant at death.

A life annuity typically provides income payments for the lifetime of the annuitant, and it ceases to make payments upon the annuitant's death.

A) death.

This option is correct because a life annuity is designed to pay out benefits for the lifetime of the annuitant. When the annuitant passes away, the payments stop, which is the fundamental characteristic of this financial product.

B) maturity.

This option is incorrect because maturity typically refers to the end of a specified term or period, not the death of the annuitant. Life annuities do not mature in the same sense as term life insurance or fixed-term investments; instead, they continue until the annuitant's death.

C) policy termination.

This option is incorrect as well. Policy termination generally relates to the cancellation of the insurance or annuity contract by either the insurer or the policyholder, which is not synonymous with the cessation of payments due to the annuitant's death.

D) age 100.

This option is incorrect because life annuities do not automatically cease payments at a specific age like 100. Instead, the payments are directly tied to the annuitant's lifespan, continuing until their death, regardless of age.

Conclusion

In summary, the correct answer is that a life annuity ceases payments to the annuitant at death, highlighting the nature of the product which is fundamentally based on the lifespan of the individual. All other options fail to capture this essential characteristic, making them incorrect in the context of life annuities.