Annuity is a contract in which the insurer agrees, for a price, to make regular payments to an individual for life or a fixed period. Which term describes this contract?

Annuity is a contract in which the insurer agrees, for a price, to make regular payments to an individual for life or a fixed period. Which term describes this contract?

• A. Variable Annuity
• B. Fixed Annuity
• C. Insurance Policy
• D. Annuity

Answer: (D)

The contract described is an annuity. Annuities are agreements where the insurer takes a premium and promises to make regular payments to the individual for life or for a specified period. That broad concept fits the description given, without specifying how large the payments are or whether they depend on investment performance. A fixed annuity is a type of annuity that guarantees a fixed payment amount, regardless of investment results. A variable annuity, on the other hand, has payments that can vary based on the performance of chosen investments. The description doesn’t commit to fixed amounts or investment-based variability, so the general term annuity is the best fit. An insurance policy is a broader product category that typically covers life, health, or property risks, not specifically an income stream paid out over time, so it isn’t the most accurate fit here.

The contract described is an annuity. Annuities are agreements where the insurer takes a premium and promises to make regular payments to the individual for life or for a specified period. That broad concept fits the description given, without specifying how large the payments are or whether they depend on investment performance.

A fixed annuity is a type of annuity that guarantees a fixed payment amount, regardless of investment results. A variable annuity, on the other hand, has payments that can vary based on the performance of chosen investments. The description doesn’t commit to fixed amounts or investment-based variability, so the general term annuity is the best fit. An insurance policy is a broader product category that typically covers life, health, or property risks, not specifically an income stream paid out over time, so it isn’t the most accurate fit here.