Which annuity covers one life?

Which annuity covers one life?

• A. Multiple life annuity
• B. Joint life annuity
• C. Single life annuity
• D. Refund life

Answer: (C)

Annuities are designed around how many lives they insure. A single life annuity provides payments for the lifetime of one person, and those payments end when that person dies. Because the insurer’s risk ends with one life, the periodic payments are typically higher than those of options that cover two lives. In contrast, a joint life annuity covers two lives and is structured so payments continue at least until both lives have ended (or until the survivor dies, depending on the contract). A refund life adds a guarantee that if the annuitant dies before receiving the full purchase amount, the remaining value is refunded to a beneficiary. A multiple life annuity covers more than one life, such as two or more individuals. Therefore, the option that specifically covers one life is the single life annuity.

Annuities are designed around how many lives they insure. A single life annuity provides payments for the lifetime of one person, and those payments end when that person dies. Because the insurer’s risk ends with one life, the periodic payments are typically higher than those of options that cover two lives. In contrast, a joint life annuity covers two lives and is structured so payments continue at least until both lives have ended (or until the survivor dies, depending on the contract). A refund life adds a guarantee that if the annuitant dies before receiving the full purchase amount, the remaining value is refunded to a beneficiary. A multiple life annuity covers more than one life, such as two or more individuals. Therefore, the option that specifically covers one life is the single life annuity.