Carol wants her annuity settlement to guarantee that the entire annuity principal amount will be paid out. What should she choose?

Choosing a cash refund annuity ensures that the entire principal amount of the annuity will be paid out, regardless of the duration of the annuitant's life. In a cash refund annuity, if the annuitant passes away before the total contributions to the annuity have been fully distributed, the remaining value will be paid to the beneficiaries as a lump sum. This structure provides a safety net for the principal amount, making it suitable for someone like Carol who desires guaranteed payment of the annuity principal.

Other types of annuities, while they may offer different benefits, do not guarantee that the total initial investment will be returned in full. For example, a period certain annuity offers payouts for a specified term but does not guarantee payment beyond that term if the annuitant dies early. A joint and full survivor annuity is designed for couples, providing ongoing payments to a surviving spouse but does not ensure the return of the full principal amount. An installment refund annuity pays out any remaining principal in installments rather than as a lump sum. Thus, for Carol's requirement to guarantee the full payout of the principal amount, the cash refund annuity is the most appropriate choice.