Which annuity option pays the highest monthly benefit because no beneficiaries are paid after death?

Which annuity option pays the highest monthly benefit because no beneficiaries are paid after death?

• A. Refund life
• B. Joint life annuity
• C. Pure life annuity
• D. Single life annuity

Answer: (C)

The key idea is how guarantees affect the monthly amount. A pure life (life-only) annuity pays the beneficiary only for as long as the annuitant is alive and stops entirely at death, with no payments to anyone afterward. Because there are no protections or refunds tied to beneficiaries or to a second life, the insurer can offer a higher monthly payment to reflect the risk of a shorter payout period. Other options add guarantees that spread or extend payments. A refund life promises to continue payments to a beneficiary if the annuitant dies early, which means the monthly amount has to be lower to cover that potential extra payout. A joint life annuity covers two lives and continues payments until both die, again reducing the monthly amount compared with a single-life offer. A single life annuity is essentially a life-only arrangement, but the term “pure life” emphasizes that no payments go to any beneficiary after death. The absence of any post-death beneficiary protection is what lets the pure life option provide the highest monthly benefit.

The key idea is how guarantees affect the monthly amount. A pure life (life-only) annuity pays the beneficiary only for as long as the annuitant is alive and stops entirely at death, with no payments to anyone afterward. Because there are no protections or refunds tied to beneficiaries or to a second life, the insurer can offer a higher monthly payment to reflect the risk of a shorter payout period.

Other options add guarantees that spread or extend payments. A refund life promises to continue payments to a beneficiary if the annuitant dies early, which means the monthly amount has to be lower to cover that potential extra payout. A joint life annuity covers two lives and continues payments until both die, again reducing the monthly amount compared with a single-life offer. A single life annuity is essentially a life-only arrangement, but the term “pure life” emphasizes that no payments go to any beneficiary after death. The absence of any post-death beneficiary protection is what lets the pure life option provide the highest monthly benefit.