Life · Chapter 9 · Fixed, Variable & Indexed
Fixed Annuity
Definition
Guarantees a predetermined, level benefit and a minimum interest rate. Premiums go into the insurer's GENERAL account (conservative investments — bonds, treasuries), so the INSURER assumes the investment risk and principal is guaranteed (if the insurer stays solvent).
Exam tip
The fixed annuity's weakness: a level payment loses buying power — it is the annuity most affected by INFLATION.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms