Which of the following is an annuity that is linked to a market-related index?

• A. Fixed annuity
• B. Variable annuity
• C. Equity indexed annuity
• D. Deferred annuity

Answer: (C)

Annuities that credit interest based on the performance of a market index while offering a minimum guarantee are designed to provide some market upside with principal protection. This is the equity indexed annuity. It ties interest credits to an index’s movement—often with a cap, a participation rate, or a guaranteed floor—so you can benefit from rising markets without risking principal. A fixed annuity, on the other hand, guarantees a fixed rate regardless of any index, so it isn’t linked to market performance. A deferred annuity is about when payments begin, not how returns are tied to the market. A variable annuity uses separate investment accounts and exposes you to market risk, with returns depending on those investments rather than a specific index linkage.