Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An annuitant chooses a "life with 10-year period certain" option and dies 3 years after payments begin. What happens to the payments?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A life with period certain option guarantees payments for a minimum number of years even if the annuitant dies early. Here, the 10-year period certain means the contract must pay for 10 years in total; since only 3 years of payments were made, the beneficiary receives the remaining 7 years of payments. After the period-certain guarantee ends, no further payments are owed if the annuitant is deceased. The option thus guarantees a minimum return while still providing lifetime income.
Why the other options are wrong
- B) Payments stopping at death describes a straight life option with no guarantee, not a period-certain contract.
- C) Payments are generally continued rather than commuted, and any lump-sum distribution of the gain would be taxable, not tax-free.
- D) The estate receives remaining payments only if no beneficiary is named, and payments end after the period certain, not for the life expectancy.
Memory hook
Period certain = a time capsule of guaranteed payments. Die at 3 of 10 years and the beneficiary collects the remaining 7.