Final answer:
Harry purchased a life annuity with a term-certain guarantee, which provides lifetime income with the additional security that if he passes away before 20 years, his beneficiary will still receive payments for the remainder of that term. This annuity type is ideal for ensuring sufficient retirement income while also considering potential inheritance for the beneficiary.
Step-by-step explanation:
Harry purchased an immediate annuity that will provide monthly payments for as long as he lives, with the additional provision that if he dies before receiving payments for 20 years, the remaining payments will go to his beneficiary. This type of annuity is known as A) A life annuity with a term-certain guarantee. This particular annuity provides guaranteed payments for a set period (term certain) ensuring that even in the event of the annuitant's early demise, the beneficiary receives payments for the remaining term.
Knowing the type of annuity is vital for saving for old age and understanding the private market options available to ensure adequate income during retirement. Annuities can serve as a tool to safeguard retirement income and manage longevity risk. Unlike other types which may carry more uncertainty, a life annuity with a term-certain guarantee offers a balanced approach between lifetime income and legacy planning.