Which type of annuity allows benefit payments to be stretched over a number of years?

• A. Immediate annuity
• B. Variable annuity
• C. Term-certain annuity
• D. Deferred annuity

Answer: (C)

Verified step by step guidance

1. Understand the concept of an annuity: An annuity is a financial product that provides a series of payments made at equal intervals. It is often used for retirement planning or income distribution.
2. Identify the key characteristic of a term-certain annuity: A term-certain annuity provides payments for a specific, predetermined number of years, regardless of whether the annuitant is alive during the term.
3. Differentiate between the types of annuities mentioned: Immediate annuities start payments right after the initial investment, variable annuities have payments that fluctuate based on investment performance, and deferred annuities delay payments until a future date.
4. Match the description in the question to the correct type of annuity: The question specifies that the payments are stretched over a number of years, which aligns with the definition of a term-certain annuity.
5. Conclude that the correct answer is 'Term-certain annuity' based on its unique feature of providing payments over a fixed term, as opposed to other types of annuities that have different payment structures.