To solve this problem, we need to understand how a joint life and 50% survivor annuity payout works. Under this arrangement, the annuity makes payments to both individuals while both are alive. When one of them dies, the survivor receives a reduced payout, often specified as a percentage of the original amount.
Here's how to solve the question step by step:
1. Identify the Current Payout:
Richard and Carole currently receive [tex]$550 a month from their annuity.
2. Determine the Survivor's Payout:
Since the annuity specifies a "50% survivor payout," this means that if Richard dies, Carole would receive 50% of the original $[/tex]550 monthly payout.
3. Calculate the 50% Survivor Payout:
To find Carole's new monthly payment after Richard's death, calculate 50% of [tex]$550.
\[ 50\% \text{ of } \$[/tex]550 = \frac{50}{100} \times 550 = \[tex]$275 \]
4. Compare with the Given Options:
- A) Carole would continue to receive $[/tex]275 a month until her death.
- B) Carole would continue to receive [tex]$775 a month until her death.
- C) Carole would continue to receive $[/tex]550 a month until her death.
- D) Annuity payments would cease.
Based on the calculation, Carole would receive [tex]$275 a month after Richard's death.
Therefore, the correct statement is:
A) Carole would continue to receive $[/tex]275 a month until her death.
