Final answer:
A Period Certain Annuity provides guaranteed payments for a set period and is useful for retirees to manage the risk of income depletion due to inflation. Defined benefits plans, being fixed, can lose purchasing power over time. Cash-value life insurance offers both a death benefit and a cash asset.
Step-by-step explanation:
When V invests money into a variable annuity with a Period Certain Annuity option, they are choosing a financial product that provides guaranteed payments for a set period of time.
This type of annuity is often used to offer a steady stream of income during retirement, protecting against the risk of outliving one's assets. Retirees, who commonly receive income from private company pensions known as defined benefits plans, may find the fixed income from these plans does not increase over time despite inflation.
Over the years, even modest inflation can lead to a significant loss of purchasing power. Additionally, concepts like cash-value life insurance provide a death benefit along with an accumulated cash value which can be used by the account holder.