A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?

a. joint and survivor

b. joint annuity

A) joint and survivor

Explanation:

A joint and survivor annuity is generally taken by married couples, and the payments continue as long as one spouse is alive. In this case, the annuity payment while both spouses were alive was $250, but it reduced to half when the wife died. Payments cease only after both spouses die.

On the other hand, a joint annuity will make payments only while both spouses are alive, and the payments will cease when one of the two, or both of the spouses die.

A

Explanation:

With this joint and survivor annuity, the married couple gets a payout of 250 dollars as long as they are alive. As the husband dies, his wife would receive 125 dollars for the rest of her life, which only amounts to 50% of the original payment. Monthly payments are lower compared to single-life annuity this is because the joint and survivor covers both the man and his wife. But however, at the death of the man's wife, the payment she was receiving stops too.