Final answer:
To start making benefit payments, a deferred annuity is annuitized, which means the contract is converted into periodic payments. This event occurs based on the annuity holder's choice and is not related to the owner's death, cash value exceeding the cost basis, or cash surrender of the annuity.
Step-by-step explanation:
The event that triggers a deferred annuity to start making benefit payments to the annuitant is C. When the contract is annuitized.
This is the process when the annuity holder, often referred to as the owner or annuitant, opts to convert the annuity's accumulated value into periodic payments that can last for a specified term or for the annuitant's lifetime.
This is different from a cash-value life insurance policy which has a death benefit and allows the policyholder access to the cash value during their lifetime.
It's important to note that option A, 'When the owner dies' is incorrect as the death of the owner typically does not trigger annuity payments; rather, it can lead to the transfer of the remaining annuity's value to named beneficiaries.
Option B, 'When the contract's cash value exceeds the cost basis,' and option D, 'Cash surrender of the annuity,' are both events unrelated to the annuitization process that actually commences the payment distribution phase of a deferred annuity.