New Jersey Life Producer Practice Exam

What is the name given to a contract that provides income to an insured until their death?

1. Accidental Death Policy

2. Life Insurance Policy

3. Endowment Policy

4. Income Annuity

The correct answer is: Income Annuity

The contract that provides income to an insured until their death is referred to as an income annuity. An income annuity is designed to generate a stream of payments for the individual, typically until they pass away. This is particularly important for individuals seeking financial security in retirement, as it guarantees a regular income. In contrast, other options like an accidental death policy primarily cover specific circumstances of death, and do not provide ongoing income. A life insurance policy generally pays a death benefit to beneficiaries rather than direct income to the insured. An endowment policy usually provides a lump sum after a specific period or at death, rather than ongoing income. Thus, the characteristics of an income annuity align perfectly with the requirement of providing continuous payments until the insured's death.