Which settlement option is described as payments based on mortality and interest calculations and continuing for as long as the annuitant lives?

Which settlement option is described as payments based on mortality and interest calculations and continuing for as long as the annuitant lives?

• A. an insurance or annuity settlement option in which payments are based on mortality and interest calculations and continue for as long as the annuitant lives
• B. a fixed-term payout
• C. payments tied to stock performance
• D. variable payout schedule

Answer: (A)

This describes a life annuity settlement option. In this approach, the payment amounts are calculated using actuarial mortality tables (to estimate how long the annuitant is expected to live) and interest considerations (to reflect the time value of money). The result is a series of payments that continues for as long as the annuitant lives, ending at death if there’s no guaranteed period or refund feature. This is different from a fixed-term payout, which ends after a set number of years regardless of whether the annuitant is alive, and from options tied to stock performance or other investments, which are not based on mortality calculations.

This describes a life annuity settlement option. In this approach, the payment amounts are calculated using actuarial mortality tables (to estimate how long the annuitant is expected to live) and interest considerations (to reflect the time value of money). The result is a series of payments that continues for as long as the annuitant lives, ending at death if there’s no guaranteed period or refund feature. This is different from a fixed-term payout, which ends after a set number of years regardless of whether the annuitant is alive, and from options tied to stock performance or other investments, which are not based on mortality calculations.