Fixed Period Option is described as?

Fixed Period Option is described as?

• A. an insurance or annuity settlement option in which an approximate amount is paid out for a chosen length of time when principal and interest are exhausted
• B. an option that provides payments for life with survivor benefit
• C. an option that guarantees payments for a minimum term regardless of principal
• D. an option that converts to a life policy at death

Answer: (A)

The key idea here is the fixed-period settlement option. It guarantees a steady stream of payments for a set, chosen span of years. The amount is planned so that the payments run for that entire term, using up the contract’s value by the end of the period. If the annuitant dies before the term ends, the remaining payments can pass to a beneficiary for the rest of the period. This is distinct from life-contingent options (which depend on how long the retiree lives) and from options that convert to a life policy at death. So this description fits a fixed-period option because it describes paying a fixed amount for a defined period, with the payments continuing for that term and stopping at its end (with potential beneficiary continuation if death occurs earlier).

The key idea here is the fixed-period settlement option. It guarantees a steady stream of payments for a set, chosen span of years. The amount is planned so that the payments run for that entire term, using up the contract’s value by the end of the period. If the annuitant dies before the term ends, the remaining payments can pass to a beneficiary for the rest of the period. This is distinct from life-contingent options (which depend on how long the retiree lives) and from options that convert to a life policy at death.

So this description fits a fixed-period option because it describes paying a fixed amount for a defined period, with the payments continuing for that term and stopping at its end (with potential beneficiary continuation if death occurs earlier).