South Carolina Life Insurance Practice Exam

How long is income paid under a pure life annuity?

1. For a fixed term of years

2. For the lifetime of the annuitant

3. Until the annuity owner decides to withdraw

4. For a specified number of payments only

The correct answer is: For the lifetime of the annuitant

The duration of income paid under a pure life annuity is based on the lifespan of the annuitant, making the correct choice the one that states it is paid for the lifetime of the annuitant. This type of annuity is designed to provide a steady stream of income for as long as the annuitant is alive, which helps mitigate the financial risk of outliving one’s savings. In other contexts, such as fixed term annuities or structured payment plans, payments may terminate after a certain number of years or specified payments, but these scenarios do not apply to pure life annuities. Any withdrawal choices or fixed terms do not align with the defining characteristic of a pure life annuity, which singularly focuses on the longevity of income relative to the annuitant's life. Therefore, the essential nature of this annuity type emphasizes its lifetime benefit.