FINRA Series 7Investment Information and Suitable RecommendationsHard
A retired couple purchasing an immediate variable annuity payout wants the payments to continue as long as either spouse is alive, with a guarantee that payments will be made for at least 15 years even if both die early. Which payout option are they selecting?
- AJoint and last survivor with period certain
- BJoint life annuity (no period certain)
- CStraight life annuity
- DLife annuity with period certain
Show answer & explanationAnswer & explanation
Correct answer: A. Joint and last survivor with period certain
A joint and last survivor with period certain option pays income for as long as either annuitant is alive AND guarantees payments for a minimum specified period (here, 15 years) to a beneficiary if both annuitants die early. This combination provides the most guarantees and therefore the lowest periodic payment among common payout options.
Why the other options are wrong
- B. Incorrect — joint life without period certain lacks the minimum guaranteed payment period.
- C. Incorrect — straight life covers a single annuitant with no guarantee period.
- D. Incorrect — a life annuity with period certain covers only a single life, not both spouses.
Joint and Last Survivor with Period Certain
An annuity payout option that pays income as long as either of two annuitants lives, with a guaranteed minimum payment period to a beneficiary if both die early.
- Covers two lives plus a guaranteed period
- Lowest periodic payment due to most guarantees
- Straight life offers highest payment but least protection
Memory trick: More guarantees = smaller checks; this option stacks two guarantees.