Which statement best describes Life Income?

Which statement best describes Life Income?

• A. It is based on mortality and interest calculations and continues for as long as the annuitant lives
• B. It provides a fixed term payout regardless of lifespan
• C. It pays only if the annuitant dies within a term
• D. It guarantees a specific dollar amount regardless of mortality

Answer: (A)

Life income is an annuity payout that is determined using actuarial assumptions about how long a person will live (mortality) and the rate of return (interest). The payments are designed to continue for as long as the annuitant lives, rather than for a fixed term or a guaranteed dollar amount regardless of longevity. This reflects the insurer pricing the payments based on the expected lifetime of the annuitant. It's not a fixed-term payout, not conditioned on death within a term, and not a guaranteed fixed dollar amount independent of how long the person lives, which is why the statement about lasting for the annuitant’s lifetime and being based on mortality and interest is the correct description.

Life income is an annuity payout that is determined using actuarial assumptions about how long a person will live (mortality) and the rate of return (interest). The payments are designed to continue for as long as the annuitant lives, rather than for a fixed term or a guaranteed dollar amount regardless of longevity. This reflects the insurer pricing the payments based on the expected lifetime of the annuitant.

It's not a fixed-term payout, not conditioned on death within a term, and not a guaranteed fixed dollar amount independent of how long the person lives, which is why the statement about lasting for the annuitant’s lifetime and being based on mortality and interest is the correct description.