Which type of annuity guarantees a payment for the life of the contract?

A life annuity is a financial product designed to provide guaranteed payments to an individual for the entire duration of their life. This type of annuity is particularly valuable for individuals seeking a consistent income stream throughout retirement, as it eliminates the risk of outliving one’s financial resources.

The payments can begin immediately after the contract is established or at a future date, depending on the specific terms of the annuity. Since the payments are tied directly to the lifetime of the annuitant, regardless of how long they live, this structure reassures individuals that they will continue to receive income even in the later stages of life when other incomes may cease.

In contrast, other types of annuities, such as payout annuities, indexed annuities, or term certain annuities, may not offer this lifelong guarantee or may have different structures and conditions associated with their payouts. For example, a term certain annuity guarantees payments only for a specified period, thus not providing the same lifelong assurance. Therefore, a life annuity stands out as the correct answer for guaranteeing payments for the life of the contract.