Question

How does an indexed annuity differ from a fixed annuity?

a) It offers a variable interest rate
b) It has no interest rate guarantee
c) Its interest is tied to a market index
d) It guarantees a fixed interest rate

Answer 1

An indexed annuity differs from a fixed annuity by tying its interest to a market index, offering a variable interest rate. On the other hand, a fixed annuity guarantees a fixed interest rate.

Step-by-step explanation:

An indexed annuity differs from a fixed annuity in that its interest is tied to a market index. It offers a variable interest rate based on the performance of the index it is linked to. On the other hand, a fixed annuity guarantees a fixed interest rate for a specific period of time.