Maria would like an annuity that provides a guaranteed accumulation or payout. What is this type of annuity called?

• A. Fixed annuity
• B. Growth annuity
• C. Annuity certain
• D. Variable annuity

Answer: (C)

A fixed annuity is designed to provide both guaranteed growth and guaranteed payments. During the accumulation phase, it credits a stated, guaranteed interest rate, so the cash value grows predictably. When it moves to the payout phase, it provides fixed, guaranteed payments. This combination of a guaranteed accumulation and a guaranteed payout is what Maria is after.

In contrast, a variable annuity offers potential for higher returns but without guarantees, and an annuity certain guarantees payments only for a set period (not the accumulation growth). Growth annuity isn’t a standard term for a guaranteed product.