Question 3

An annuity where the policyowner chooses a pre-determined number of benefit payments is referred to as a Period Certain.

A Period Certain annuity allows the policyowner to select a specific duration during which benefit payments will be made, ensuring that the payments continue for that set period regardless of the annuitant's lifespan.

A) Refund Life.

Refund Life annuities are designed to return any remaining funds to beneficiaries if the annuitant passes away before receiving the total amount contributed. This option does not focus on a predetermined number of payments but rather on the return of investment, making it incorrect in this context.

B) Period Certain.

A Period Certain annuity is characterized by the policyowner's ability to select a fixed number of benefit payments. This means that payments will be made for a specified period, aligning perfectly with the definition given in the question.

C) Amount Certain.

Amount Certain annuities guarantee a specified amount of money will be paid, but they do not necessarily relate to a pre-determined number of payments. Instead, they focus on the total payout, which can vary based on the duration of the annuity, rendering this option incorrect.

D) Straight Life.

Straight Life annuities provide payments solely during the lifetime of the annuitant and cease upon their death. This type does not involve a pre-determined number of payments and instead guarantees payment for the annuitant's lifetime, making it an unsuitable choice for the question.

Conclusion

The Period Certain annuity is the only option that accurately describes an annuity where the policyowner selects a specific number of benefit payments. Other options, such as Refund Life, Amount Certain, and Straight Life, do not fulfill the requirement of a predetermined payment duration, confirming that B is the correct answer.