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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products

Mrs. Sunita Joshi, a retired teacher, wants a guaranteed pension for life with return of purchase price to her nominee on her death. Which annuity option best fits her need?

A life annuity with return of purchase price suits her. It pays a pension for as long as she lives and, on her death, returns the original purchase amount to the nominee. The other options either give no death benefit or stop after a fixed period.

  1. ALife annuity without return of purchase price
  2. BAnnuity certain for 10 years only
  3. CLife annuity with return of purchase priceCorrect
  4. DDeferred annuity with no death benefit

Explanation

A life annuity with return of purchase price pays income as long as the annuitant lives and returns the purchase price to the nominee on death. Life annuity without return gives nothing to the nominee, annuity certain pays only for a fixed period, and a deferred annuity with no death benefit does not meet either need.

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