Annuitant

In an annuity, the annuitant is:

1. A.The person whose life determines the payoutCorrect - payout is based on the annuitant.
2. B.The beneficiary onlyThe beneficiary is the party who receives whatever remains at the annuitant's death, and the two roles are frequently filled by different people. Payout size is calculated from the annuitant's life expectancy, not the beneficiary's.
3. C.The custodianA custodian safekeeps assets or administers an account for a minor. That is an administrative function with no bearing on how large the periodic payment will be, which is set by the annuitant's life expectancy.
4. D.The insurance agentThe agent sells the contract and is compensated for doing so, then steps out of the picture. Nothing about the agent enters the payout calculation, which depends on the life expectancy of the person named as annuitant.

Why: The annuitant is the person whose life expectancy determines the payout amount.

A life annuity with period certain:

1. A.Pays only for a fixed 5 yearsThis describes a plain fixed-period arrangement. The design in the stem adds a lifetime element, so payments keep coming past the guaranteed span if the annuitant is still living.
2. B.Pays for life but guarantees a minimum number of paymentsCorrect - lifetime income with a guaranteed floor period.
3. C.Stops at the first missed premiumPremiums are not the mechanism here. The contract has already been funded and is in its payout stage, so payments continue on their own terms rather than depending on further contributions.
4. D.Pays nothing at death everThe certain period exists specifically so that something is paid when the annuitant dies early. A named payee collects the remaining guaranteed installments.

Why: It pays for the annuitant's lifetime but guarantees payments for at least a stated minimum number of years.

The contingent deferred sales charge in a deferred annuity is best described as a charge that

1. A.the insurer subtracts from each premium payment before crediting it to the contract value.Wrong. That is a front-end load, and the contingent design exists precisely to avoid taking anything at deposit.
2. B.applies only where the owner withdraws more than the contract permits in the early years, and declines over time.Correct. Both halves matter: it is triggered by an early excess withdrawal, and it steps down until it lapses.
3. C.compensates the insurer for the possibility that the annuitant lives longer than the pricing assumed.Wrong. That is the mortality element of the mortality and expense charge, which is levied whether or not anyone withdraws.
4. D.is assessed each year against the contract value to cover recordkeeping, statements and tax reporting.Wrong. That describes the annual administration fee, which runs regardless of any withdrawal activity.

Why: A contingent deferred sales charge lets the insurer recover the distribution cost it paid up front without deducting anything from the premium at the outset. It bites only if the owner takes out more than the contract allows during the early contract years, and it steps down on a published schedule until it disappears. Because nothing is skimmed from the deposit, the owner sees the entire premium credited on day one, which is what makes the charge contingent rather than certain. An owner who stays within the free withdrawal allowance, or waits out the schedule, never pays it.

In a deferred annuity contract, the annuitant is the person

1. A.who holds the contract and alone may surrender it or name a different beneficiary.Wrong. Those are the rights of the owner, who need not be the measuring life at all.
2. B.who receives the death benefit of the contract if death occurs before annuitization.Wrong. That role belongs to the beneficiary, who is named by the owner and may be changed.
3. C.who stands behind the periodic payments for as long as the contract remains in force.Wrong. The insurer alone makes that promise; no individual guarantees an annuity payout.
4. D.whose life expectancy the insurer uses in determining the amount of the periodic payments.Correct. The measuring life supplies the mortality input, which is the one thing the annuitant contributes to the contract.

Why: An annuity contract distinguishes three roles that a single person may or may not fill at once. The owner holds the contractual rights, including surrender, withdrawal and beneficiary designation; the beneficiary receives whatever is payable at death before annuitization; and the annuitant is the measuring life whose age and life expectancy the insurer uses to price the periodic payments. Because the annuitant supplies the mortality measure, replacing the annuitant changes the payout even though the account value is untouched. If the contract were annuitized on a joint basis, two measuring lives would set the factor instead of one.