Under an annuity with a 'life with 10-year period certain' payout, the beneficiary becomes entitled to payments when:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A life-with-10-year-period-certain annuity guarantees payments for at least 10 years even if the annuitant dies during that period. If the annuitant dies before the certain period ends, the remaining guaranteed payments are made to the beneficiary. If the annuitant survives beyond the 10-year period, payments continue for life and nothing remains for the beneficiary at death. This option protects against an early death by ensuring a minimum number of payments reach the beneficiary, which is why it is a common choice when a client wants lifetime income plus a guaranteed legacy.
Why the other options are wrong
- B) The owner's death transfers ownership of the contract as an asset; it does not trigger benefit payments to the beneficiary. Payments continue according to the annuitant's life.
- C) Age 65 is not a triggering event. Income begins according to the contract's commencement date and the payout election, not at a fixed age.
- D) Surrender ends the contract and pays the owner the cash surrender value. It does not create beneficiary entitlement to ongoing payments.
Memory hook
Period certain equals a guaranteed runway of payments, even if life ends early.