Final answer:
The nontaxable portion of each annuity benefit payment is referred to as the Exclusion ratio, which is used to determine the part of the annuity that is a return of investment and is not subject to tax.
Step-by-step explanation:
The term that refers to the nontaxable portion of each annuity benefit payment is D) Exclusion ratio. When an individual receives annuity payments, part of each payment can be considered a return of the principal initially invested, which is not taxed. The exclusion ratio is a calculation used to determine what portion of the annuity payment is a return of this principal and is thus nontaxable. The remaining part of the payment is usually considered interest and may be subject to taxation.