Which term describes an annuity that guarantees a fixed payout or accumulation?

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

Answer: (C)

Annuity certain describes a payout arrangement that is fixed for a definite period. The insurer guarantees the payments for the chosen term, regardless of whether the owner is alive for the entire period. If the annuitant dies before the term ends, the remaining payments still go to a beneficiary for the rest of that period. That guarantees a fixed payout over a set time, which is exactly what’s meant by a guaranteed fixed payout or accumulation for a defined term.

By comparison, a fixed annuity guarantees a fixed payment amount and a minimum credited rate but isn’t inherently defined by a specific time period; indexed and variable annuities depend on market or index performance and don’t offer a guaranteed fixed payout.