If a Retirement Annuity Contract (RAC) has a value of €60,000 and is accompanied by a Pension Term Assurance policy for €100,000, what is the total payout if the member dies today?

If a Retirement Annuity Contract (RAC) has a value of €60,000 and is accompanied by a Pension Term Assurance policy for €100,000, what is the total payout if the member dies today?

• A. €60,000
• B. €40,000
• C. €100,000
• D. €160,000

Answer: (D)

Two separate death benefit components are paid in addition to each other. The RAC has a fund value of €60,000, which is the lump sum available to beneficiaries if the member dies before converting to a retirement income. The Pension Term Assurance policy pays a separate €100,000 on death. If death occurs today, both benefits are typically payable, giving a total of €60,000 + €100,000 = €160,000. The other options would reflect only one component or miss one part of the total. The key idea is that the RAC value and the term assurance payout are additive when both are in force.

Two separate death benefit components are paid in addition to each other. The RAC has a fund value of €60,000, which is the lump sum available to beneficiaries if the member dies before converting to a retirement income. The Pension Term Assurance policy pays a separate €100,000 on death. If death occurs today, both benefits are typically payable, giving a total of €60,000 + €100,000 = €160,000. The other options would reflect only one component or miss one part of the total. The key idea is that the RAC value and the term assurance payout are additive when both are in force.