Which annuity type is described as fixed annuities that invest on an aggressive basis to aim for higher returns and has a guaranteed minimum interest rate?

Which annuity type is described as fixed annuities that invest on an aggressive basis to aim for higher returns and has a guaranteed minimum interest rate?

• A. Deferred annuity
• B. Fixed annuity
• C. Indexed annuities
• D. Immediate annuity

Answer: (C)

Indexed annuities combine the safety of a fixed contract with potential higher interest based on a market index. They credit interest tied to the index’s performance, which can increase overall credited rates beyond a standard fixed rate, giving you upside potential while keeping a guaranteed minimum rate as a floor. If the index performs well, you may receive higher credits (subject to factors like a participation rate and a cap); if it performs poorly, the guaranteed minimum rate ensures you still earn something rather than nothing. This structure—guaranteed floor with index-linked upside—fits the description of fixed annuities that aim for higher returns while protecting principal.

Indexed annuities combine the safety of a fixed contract with potential higher interest based on a market index. They credit interest tied to the index’s performance, which can increase overall credited rates beyond a standard fixed rate, giving you upside potential while keeping a guaranteed minimum rate as a floor. If the index performs well, you may receive higher credits (subject to factors like a participation rate and a cap); if it performs poorly, the guaranteed minimum rate ensures you still earn something rather than nothing. This structure—guaranteed floor with index-linked upside—fits the description of fixed annuities that aim for higher returns while protecting principal.