84. In a deferred annuity, which event initiates benefit payments to the annuitant?
Answer: C
The contract matures
Benefit payments to the annuitant in a deferred annuity begin when the contract matures. This is the point at which the annuitant is eligible to start receiving periodic payments, typically after a predetermined accumulation period.
A) The contract is surrendered
Surrendering the contract refers to the annuitant terminating the annuity agreement before maturity, which does not trigger benefit payments. Instead, the annuitant may receive a lump sum or a partial withdrawal based on the contract's terms, but regular benefit payments do not commence.
B) A cash refund is paid
A cash refund is a provision that may exist within the annuity contract to return a portion of the premium payments to the annuitant or their beneficiaries if the annuitant dies before receiving full benefits. However, this event does not initiate benefit payments; rather, it is a separate provision concerning the death of the annuitant.
C) The contract matures
The maturation of the contract is the specific event that triggers benefit payments to the annuitant. At this point, the annuitant can start receiving the regular income stipulated in the annuity agreement, making this option the correct answer.
D) The beneficiary dies
The death of the beneficiary does not initiate benefit payments to the annuitant. Instead, it affects the payout structure to the designated beneficiary and may result in a death benefit being paid out, but it does not relate to the commencement of payments to the annuitant.
Conclusion
The correct answer, "The contract matures," clearly defines when benefit payments are initiated in a deferred annuity. All other options do not fulfill the criteria for starting payments, as they pertain to different scenarios within the annuity's lifecycle. Therefore, understanding the maturation stage is essential for comprehending when benefits become available to the annuitant.