Life · Chapter 9 · Payout Options
Life with Refund Option (Installment / Cash)
Definition
Lifetime income with a guarantee that the entire principal gets paid out — to the annuitant or, if they die first, to the beneficiary. Installment refund: beneficiary keeps receiving the same monthly checks until the principal is exhausted. Cash refund: beneficiary gets the remaining principal in one lump sum. The guarantee makes this option cost more.
Exam tip
Annuity certain guarantees a PERIOD of payments; a refund annuity guarantees the PRINCIPAL is fully paid. Different promises — classic exam contrast.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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