Question 31

An annuity that guarantees a given number of income payments, whether or not the annuitant is alive to receive them, is referred to as a life annuity certain.

A life annuity certain guarantees that payments will be made for a specified period, regardless of whether the annuitant is alive to receive them.

A) a life annuity certain

This option is correct because a life annuity certain ensures that the annuitant receives payments for a predetermined number of years, thus fulfilling the condition of guaranteeing payments irrespective of the annuitant's survival.

B) an assured life annuity

This option is incorrect as an assured life annuity typically provides payments for the lifetime of the annuitant, but does not guarantee payments for a certain number of years if the annuitant passes away before the term ends.

C) a guaranteed survivor annuity

This option is also incorrect because a guaranteed survivor annuity is designed to continue payments to a beneficiary after the annuitant's death, rather than ensuring a set number of payments to the annuitant themselves.

D) an irrevocable endowed annuity

This option is incorrect as an irrevocable endowed annuity refers to a different type of financial product that may involve a lump sum payment upon maturity, but does not guarantee a series of income payments for a specified period.

Conclusion

A life annuity certain is definitively the correct choice, as it directly matches the definition of an annuity that guarantees income payments for a set time frame, regardless of the annuitant's mortality. The other options fail to meet this specific criterion, instead focusing on other aspects of annuity structures that do not guarantee payments in the same manner.