Question

allotted time: 75 minutes
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13 angelo is 62 years old and has $120,000 in his tax - free savings account (tfsa). he deposits the funds to purchase a registered immediate annuity contract from xyz insurers through his agent. his immediate family comprises his wife and a son. he wants to name his son as the beneficiary of the contract. which of the following is true about the parties involved in angelos annuity contract?
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a. angelo will be the policyholder and his wife or son will be the payee.
b. angelo must name someone else other than himself as the annuitant.
c. angelo will be the policyholder and must assign someone else as the annuity grantee.
d. angelo will be the policyholder, the annuitant, and the payee.
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Explanation:

To solve this, we analyze each option:

• Option a: The payee is the one who receives annuity payments. In an immediate annuity, the annuitant (Angelo, as he's the one using his funds) is typically the payee. His wife or son wouldn't be the payee here, so a is incorrect.
• Option b: The annuitant is the person whose life the annuity is based on (or the one contributing funds). Angelo can be the annuitant (since he's 62 and using his TFSA funds), so b is incorrect.
• Option c: The annuity grantee isn't a standard term here. The key roles are policyholder (Angelo, who owns the contract), annuitant (Angelo, as the annuity is for his benefit), and payee (Angelo, receiving payments). So c is incorrect.
• Option d: Angelo is the policyholder (he purchases the annuity), the annuitant (the annuity is based on his situation/funds), and the payee (he receives the immediate annuity payments). This matches the roles in an immediate annuity contract.

Answer:

d. Angelo will be the policyholder, the annuitant, and the payee.