New Jersey Life Insurance Exam Practice Question
A widow age 70 has $250,000 in savings that she wants to distribute to her 5 grandchildren at her death. She also has a need for income. Which of the following is this?
Correct Answer: A
Rationale: Option A effectively addresses both the widow's need for income and her desire to provide for her grandchildren. By purchasing an immediate income annuity, she secures a steady income stream while ensuring that the principal amount can be passed on to her grandchildren through a cash refund option, thus fulfilling her financial and familial goals.
Option B, while providing a death benefit, does not offer immediate income, which is essential for her current needs.
Option C splits the funds into deferred annuities, delaying any income for the widow until the grandchildren reach a certain age, which may not align with her immediate financial requirements.
Option D provides a straightforward distribution but neglects her income needs entirely, potentially leaving her financially vulnerable.
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