Which statement is true regarding a joint life annuity?

In the context of a joint life annuity, the statement that payments stop at the first death is accurate. A joint life annuity is designed to provide income for two individuals, typically spouses or partners, for as long as at least one of them is alive. When one of the two individuals passes away, the annuity payments cease. This structure is particularly beneficial for couples, as it ensures that they can rely on a steady income while both are living. The financial planning aspect often includes considering how to provide for the survivor while acknowledging that the income will end with the first death.

This feature is distinct from other types of annuities, such as a joint and survivor annuity, which continue to pay a reduced benefit to the survivor after the death of one partner. The characteristics of that type ensure continued payments until the death of the second individual. In contrast, a typical joint life annuity does not provide for continued payments after the first death, thereby making the understanding of this concept crucial for anyone studying life insurance and annuities.