If the annuitant dies before the invested amount is recovered, the remainder goes to the beneficiary with no interest.

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Multiple Choice

If the annuitant dies before the invested amount is recovered, the remainder goes to the beneficiary with no interest.

The key idea here is how refund features work in life annuities. In a life annuity with a refund option, payments continue for the annuitant’s lifetime, and if the total payments received don’t equal the amount originally invested, the remaining balance is paid to a beneficiary. The phrase “with no interest” means the beneficiary gets the unpaid principal only, not any interest that would have accrued. This distinguishes it from other options: a pure or single life annuity ends at death with nothing left to the beneficiary, while a joint life annuity is designed to continue payments after death to a surviving person, not to refund the original investment. So the scenario described matches the refund life option.

The key idea here is how refund features work in life annuities. In a life annuity with a refund option, payments continue for the annuitant’s lifetime, and if the total payments received don’t equal the amount originally invested, the remaining balance is paid to a beneficiary. The phrase “with no interest” means the beneficiary gets the unpaid principal only, not any interest that would have accrued. This distinguishes it from other options: a pure or single life annuity ends at death with nothing left to the beneficiary, while a joint life annuity is designed to continue payments after death to a surviving person, not to refund the original investment. So the scenario described matches the refund life option.

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