NASAA Series 66 Uniform Combined State Law ExaminationInvestment Vehicle CharacteristicsMedium
A client, aged 60, is considering retiring soon and wants to ensure a guaranteed income stream for the rest of their life, as well as for their spouse should they outlive the client. They are concerned about outliving their savings. Which type of annuity payout option would be most appropriate for this situation?
- AJoint and Last Survivor Annuity
- BLife with Period Certain
- CRefund Annuity
- DLife Annuity (Straight Life)
Show answer & explanationAnswer & explanation
Correct answer: A. Joint and Last Survivor Annuity
A Joint and Last Survivor Annuity provides payments for the lives of two or more annuitants, continuing as long as at least one annuitant is alive. This is ideal for a couple concerned about one spouse outliving the other's income stream.
Why the other options are wrong
- B. Life with Period Certain guarantees payments for a minimum period, but still primarily focuses on one life with a fallback.
- C. A Refund Annuity guarantees that the purchase price will be returned, but doesn't ensure income for a survivor beyond that.
- D. A Straight Life Annuity only pays for the life of one annuitant, stopping upon their death.
Joint and Last Survivor Annuity
An annuity payout option that provides income payments for the lives of two or more individuals, continuing until the last annuitant dies.
- Covers two or more lives
- Payments continue as long as one annuitant is alive
- Often used by married couples
- Typically offers lower periodic payments than a single-life annuity
Memory trick: Annuity payments last like a 'life' sentence, or as a 'joint' venture.