Final answer:
If an annuitant with a fixed period annuity dies before the end of the payment period, the payments continue to the beneficiary. This is chosen to ensure beneficiaries receive income for the fixed period. It's important in retirement planning, similarly to considering inflation impact on fixed pensions.
Step-by-step explanation:
In the context of a fixed period annuity or period certain annuity, when the annuitant passes away before the designated period of payments has concluded, the correct answer is A. The remaining payments continue to be made to the beneficiary.
This type of annuity is structured to provide guaranteed payments for a specific number of years (annuity period) and is often chosen as a way to ensure that beneficiaries receive an income for at least that fixed period, even in the event of the annuitant's early death.
Understanding the nature of annuities is important, particularly for those who rely on them for retirement income. A defined benefits plan, such as a private pension, promises to pay a set income but does not typically adjust for inflation, leading to a loss of purchasing power over time. Therefore, selecting the appropriate annuity option is critical for financial planning.