In a typical annuity contract, the policyholder makes a lump sum payment to the insurer. In exchange, the insurer commits to provide the policyholder with a stream of regular payments for a specified period of time. In some cases, the policyholder may receive payments for the rest of their life.

Option A is incorrect. Term life insurance lasts a predetermined number of years. The sum assured is payable only if the insured dies within the term of the policy.

Option C is incorrect. A universal life contract is a whole life assurance with an investment component. However, a universal contract gives the policyholder a lot more flexibility regarding the premium payable. The premium can even be reduced to a pre-specified minimum without the policy lapsing. Lapsing occurs when a policyholder quits paying premiums resulting in the withdrawal of the policy. Reducing premiums will, however, reduce the expected benefits.

Option D is incorrect. Under an endowment contract, the sum assured is payable either when the policyholder dies or at the end of the specified period, whichever comes first.