What does the reducing survivor option in an annuity do?

What does the reducing survivor option in an annuity do?

• A. Pays the surviving spouse the full original amount
• B. Keeps payments level after death for the survivor
• C. Continues paying a reduced amount to the surviving spouse
• D. Converts payments to a lump sum for heirs

Answer: (C)

When an annuity offers survivor options, you’re choosing how payments continue after one life ends. The reducing survivor option specifically keeps payments going to the surviving spouse, but at a smaller, reduced amount. This approach provides ongoing income for the survivor while acknowledging that the total payout is now spread over fewer life years, so the regular payments don’t stay at the original level. It’s different from continuing the full original payment to the survivor or converting payments to a lump sum for heirs, which aren’t how this option works.

When an annuity offers survivor options, you’re choosing how payments continue after one life ends. The reducing survivor option specifically keeps payments going to the surviving spouse, but at a smaller, reduced amount. This approach provides ongoing income for the survivor while acknowledging that the total payout is now spread over fewer life years, so the regular payments don’t stay at the original level. It’s different from continuing the full original payment to the survivor or converting payments to a lump sum for heirs, which aren’t how this option works.