Which of the following is a valid annuity payment option?

Which of the following is a valid annuity payment option?

• A. Life Income (Pure or Straight Life)
• B. Life Income Period Certain
• C. Life Income with Refund (Installment or Cash Refund)
• D. Annuity Certain

Answer: (D)

Annuity Certain is a fixed-term payout option. It guarantees payments for a set number of years regardless of how long the annuitant lives. This makes the income stream predictable and independent of longevity, which is why it’s highlighted as a valid and straightforward option when the question focuses on a guaranteed, time-bound payout. Other options describe life-contingent structures: some pay only while the person is alive, stopping at death; some guarantee payments for a minimum period but still involve life expectancy or refunds to a beneficiary; and others provide refunds or continued payments in different forms. While these are legitimate payout forms, they rely on the annuitant’s lifespan or on refunds, whereas Annuity Certain provides a clear, fixed-term guarantee independent of survival.

Annuity Certain is a fixed-term payout option. It guarantees payments for a set number of years regardless of how long the annuitant lives. This makes the income stream predictable and independent of longevity, which is why it’s highlighted as a valid and straightforward option when the question focuses on a guaranteed, time-bound payout.

Other options describe life-contingent structures: some pay only while the person is alive, stopping at death; some guarantee payments for a minimum period but still involve life expectancy or refunds to a beneficiary; and others provide refunds or continued payments in different forms. While these are legitimate payout forms, they rely on the annuitant’s lifespan or on refunds, whereas Annuity Certain provides a clear, fixed-term guarantee independent of survival.