Question
At the time that George bought his life annuity, his life expectancy was 20 years. However, George lived for 50 more years and died at age 117. What happened to his annuity after he reached his life expectancy?
1. Nothing; it continued to pay the same benefit.
2. The annuity income became tax-free.
3. The annuity income increased to offset inflation.
4. The periodic income stopped.
1. Nothing; it continued to pay the same benefit.
2. The annuity income became tax-free.
3. The annuity income increased to offset inflation.
4. The periodic income stopped.
Answers
GPT-4o mini
The correct answer is:
1. Nothing; it continued to pay the same benefit.
A life annuity provides payments for the lifetime of the annuitant, regardless of how long they live beyond their expected life expectancy. In George's case, despite living 50 years longer than his life expectancy, the annuity payments would have continued as per the terms of the contract.
1. Nothing; it continued to pay the same benefit.
A life annuity provides payments for the lifetime of the annuitant, regardless of how long they live beyond their expected life expectancy. In George's case, despite living 50 years longer than his life expectancy, the annuity payments would have continued as per the terms of the contract.