Multiple Choice
Which of the following is a key feature of conventional 30-year mortgages?
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7. Receivables and Investments
Introduction to Investments in Securities
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Under a pure life annuity, an income is payable by the company:
A
Only during the lifetime of the annuitant
B
For a fixed number of years regardless of the annuitant's life
C
Until the annuitant's beneficiaries pass away
D
Until the annuitant reaches age 65
Verified step by step guidance1
Understand the concept of a pure life annuity: A pure life annuity is a financial product that provides periodic payments to the annuitant for as long as they are alive. Payments cease upon the death of the annuitant, and no further payments are made to beneficiaries or heirs.
Analyze the options provided in the question: The correct answer must align with the definition of a pure life annuity, which specifies payments only during the lifetime of the annuitant.
Eliminate incorrect options: For example, 'For a fixed number of years regardless of the annuitant's life' does not align with the definition of a pure life annuity, as payments are contingent on the annuitant's survival.
Further eliminate options that involve beneficiaries or specific age limits: 'Until the annuitant's beneficiaries pass away' and 'Until the annuitant reaches age 65' are inconsistent with the concept of a pure life annuity, which is solely based on the annuitant's lifetime.
Select the correct answer: Based on the definition and elimination process, the correct answer is 'Only during the lifetime of the annuitant.'
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