Question 89

A life annuity ceases payments to the annuitant at death.

A life annuity typically provides income payments to the annuitant for their lifetime, and these payments cease upon the annuitant's death.

A) death.

This option is correct because a life annuity is designed to provide payment to the annuitant only while they are alive, terminating the payments once they pass away.

B) maturity.

Maturity refers to the end of a financial instrument’s term; however, in the context of a life annuity, it is irrelevant since the annuity’s payments are contingent on the annuitant's lifetime rather than a fixed term.

C) policy termination.

Policy termination typically pertains to the cancellation of the insurance policy by the insurer or policyholder, which is not a standard condition for the cessation of payments in a life annuity, making this option incorrect.

D) age 100.

This option suggests a fixed age at which payments would end, but life annuities are structured to last for the lifetime of the annuitant, not ceasing at a predetermined age unless specified in a different type of annuity.

Conclusion

The correct answer, death, accurately reflects the defining characteristic of a life annuity, which is to continue payments until the annuitant passes away. All other options fail because they do not align with the fundamental principle governing the duration of payment in a life annuity.