Which type of annuity guarantees a stated number of income payments, regardless of whether the annuitant is alive?

• A. Life annuity certain
• B. Life annuity
• C. Fixed annuity
• D. Variable annuity

Answer: (A)

The key idea here is a guaranteed number of payments independent of how long the annuitant lives. A life annuity certain is designed to provide a fixed stream of payments for a stated period, no matter what happens to the annuitant’s life. If the annuitant dies before that period ends, the remaining payments are often continued to a beneficiary for the rest of the period. If the period ends while the annuitant is still alive, payments stop at that point.

This differs from a plain life annuity, which pays out only while the person is alive and ends at death. A fixed annuity focuses on a guaranteed payment amount, but not on guaranteeing a specific number of payments regardless of survival. A variable annuity’s payments depend on investment performance and are not guaranteed to cover a fixed number of payments.

So, a life annuity certain best fits the idea of guaranteeing a stated number of income payments regardless of survival.