PSI Ohio Insurance Practice Exam

What does the joint and survivorship option in an annuity provide?

1. A lump sum payment to beneficiaries

2. A stated monthly amount to the annuitant only

3. A monthly amount to the annuitant for life and lesser amount to survivor

4. A fixed amount for a set number of years

The correct answer is: A monthly amount to the annuitant for life and lesser amount to survivor

The joint and survivorship option in an annuity is designed to provide ongoing financial support to both the annuitant and a designated survivor, typically a spouse or partner. When the annuitant passes away, the annuity continues to pay out a reduced monthly amount to the surviving individual for the remainder of their life. This arrangement ensures that both individuals have a level of income security, addressing the risk that one partner may outlive the other. In this format, while the initial payout to both parties is often higher than if only one individual were receiving the funds, the amount paid to the survivor is typically decreased relative to what was previously received by the couple. This structure helps manage the longevity risk of both individuals involved, offering peace of mind that financial support will remain even after the death of one partner. Thus, this option effectively combines both a retirement income strategy while providing for the needs of the remaining spouse or designated survivor.