Texas General Lines – Life, Accident, And Health Insurance (LAH05) Practice Test

Straight Life Annuity is best described as...

A plan that continues payments to a beneficiary after death An annuity that pays a guaranteed stream of income but ceases payments upon the death of the annuitant An annuity whose payments increase to match inflation Annuity that returns premiums at death

Correct Answer:

An annuity that pays a guaranteed stream of income but ceases payments upon the death of the annuitant

Explanation:

A Straight Life annuity focuses on providing income for the lifetime of the person who purchases it. The payments are guaranteed for as long as the annuitant lives, and they stop when the annuitant dies. There is no provision to continue payments to a beneficiary after death, and no return of premiums at death. This is why it best fits the description of a guaranteed stream of income that ceases upon the annuitant’s death. Other features described in different options—continuing payments to a beneficiary, inflation-adjusted payments, or returning premiums at death—belong to other types of annuities or rider options, not the Straight Life arrangement.

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