Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
The difference between a cash refund annuity and an installment refund annuity is that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Refund annuities guarantee that the owner's purchase price will not be lost if the annuitant dies early. A cash refund annuity pays the beneficiary the difference between the total premiums paid and the amounts already distributed as a single lump sum. An installment refund annuity instead continues making periodic income payments to the beneficiary until the total of all payments equals the purchase price. Both protect the cost basis, but they pay the shortfall in different forms.
Why the other options are wrong
- B) Both refund options pay periodic income first; the difference is the form the refund takes after the annuitant dies.
- C) A minimum guaranteed payment period is the feature of a life-with-period-certain option, not the refund annuity distinction.
- D) Refund options are available in both fixed and variable annuity contracts.
Memory hook
Refund annuity = no money lost. Cash refund = lump-sum shortfall check; installment refund = keep the checks coming until whole.