A 67-year-old married annuitant is ready to annuitize her deferred annuity. She wants income for her own lifetime, and if she dies before her husband, she wants the payments to continue to him for the rest of his life. She should select the option under which:

Why D is correct

The option described is joint and survivor, which covers two lives: payments continue as long as either annuitant lives, so the surviving spouse receives income for life. Because the insurer must pay for two lifetimes, the monthly amount is smaller than a straight life annuity on one life, but it is the only option that guarantees lifetime income for both the annuitant and the survivor. For a married annuitant whose primary concern is supporting her spouse after death, joint and survivor is the appropriate choice.

Why the other options are wrong

• A) A single-life (straight life) payment stops at the annuitant's death and leaves the husband with nothing, which defeats her stated objective; it pays the most monthly precisely because it carries no survivor guarantee.
• B) A refund option returns only the undistributed principal in a lump sum; it provides no continuing lifetime income for the surviving spouse and is designed to protect the purchase price, not to support a survivor.
• C) A period certain option guarantees payments only for the fixed term; if the husband survives beyond the end of the period, payments stop, so it does not assure lifetime income for him.

Memory hook

No spouse, no heirs in mind = straight life for the fattest check. Guarantees shrink the payment.