3.7.4.7.2. Payout Options (Settlement Options)
When annuitization begins, the investor must select a method of receiving payments. For the exam, you will need to know the following settlement options and how they relate to the size of the annuitant’s monthly check:
• Life income. The insurer pays the annuitant an income during his lifetime. When the annuitant dies, benefits stop. Because this option is likely to exist for the shortest amount of time, and, therefore, will be the least expensive for the insurance company, the annuitant will receive the largest monthly check with this option.
• Life with period certain. The insurer pays the annuitant an income during his lifetime. As part of the initial contract, the annuitant cho