Question

Henry has a Life with Period Certain annuity (life or ten years) in which his wife, Harriet, is the beneficiary. If Henry dies after 5 years, what will Harriet receive?

a) Payments for life
b) Payments for the remaining 5 years
c) Payments for 10 years
d) One-time lump sum

Answer 1

Harriet will receive payments from Henry's Life with Period Certain annuity for the remaining 5 years of the 10 years, as he passed away after 5 years. Option b) Payments for the remaining 5 years is the correct answer.

Step-by-step explanation:

If Henry has a Life with a certain annuity (life or ten years), and he dies after 5 years, then his wife, Harriet, will receive payments for the remaining 5 years. In a life with period certain annuity, the annuitant receives payments for life or for a guaranteed period (the 'certain period'), whichever is longer.

Since Henry passed away after 5 years, Harriet will receive the payments for the guaranteed period that has not yet elapsed, which in this case is the remaining 5 years of their 10-year period certain. Therefore, the correct answer to what Harriet will receive is (b) Payments for the remaining 5 years.