Which option represents a life annuity option?

• A. Life income
• B. Joint & survivor income
• C. Lump-sum settlement
• D. Enhanced annuity

Answer: (A)

The key idea is understanding the basic life annuity, which pays income for as long as the recipient lives. This life income arrangement guarantees payments for the lifetime of the annuitant and ends at death (unless a period-certain rider is added). That makes it the classic life annuity option.

Joint & survivor income, while still an annuity payout, covers two lives and continues payments to a surviving person after the first dies, so it’s a different type of life-contingent option. A lump-sum settlement is a single, upfront payment rather than ongoing payments. An enhanced annuity isn’t a standard, basic settlement option. Therefore, the life income option best represents a life annuity.