South Carolina Life Insurance Practice Exam

Which of the following statements regarding the annuity period is TRUE?

1. It is always limited to a fixed period

2. It can last for the lifetime of the annuitant

3. It is non-recurring

4. It is determined by age alone

The correct answer is: It can last for the lifetime of the annuitant

The annuity period refers to the time frame during which the annuity pays out benefits to the annuitant. The statement that the annuity period can last for the lifetime of the annuitant is indeed true because many annuities are designed to provide a steady income stream for as long as the annuitant lives. This feature is particularly common in lifetime annuities, which guarantee payments until the death of the annuitant, offering financial security and a dependable income during retirement. Lifetime annuities can be structured to provide monthly, quarterly, or annual payments that continue for the lifetime of the recipient, ensuring that they do not outlive their resources. This aspect of annuities is significant for financial planning, particularly for retirees who need to budget expenses over an uncertain lifespan. In contrast, other options provided are limited in their scope. For instance, while some annuities may indeed have a fixed period, this does not apply universally across all types of annuities. The nature of annuities allows for flexibility based on individual needs. Similarly, the annuity period is recurring, as payments continue to be made at specified intervals until the terms conclude. Also, determining the annuity period is not solely based on age;