In fixed annuities, how is the guaranteed minimum interest rate described?

In fixed annuities, how is the guaranteed minimum interest rate described?

• A. It varies with market conditions
• B. It is specified in the contract and remains unchanged
• C. It is determined by market trends
• D. It fluctuates yearly based on inflation

Answer: (B)

The guaranteed minimum interest rate for fixed annuities is specified in the contract and remains unchanged throughout the duration of the annuity. This means that the insurer commits to paying a predetermined rate of interest, providing a level of security and predictability for the policyholder. This aspect is critical for consumers looking for stable, long-term investment options since they can rely on this guaranteed return without concern about market volatility. Consequently, the contractual nature of this rate is what distinguishes it from other types of investment vehicles that may have rates influenced by market conditions or trends.

The guaranteed minimum interest rate for fixed annuities is specified in the contract and remains unchanged throughout the duration of the annuity. This means that the insurer commits to paying a predetermined rate of interest, providing a level of security and predictability for the policyholder. This aspect is critical for consumers looking for stable, long-term investment options since they can rely on this guaranteed return without concern about market volatility. Consequently, the contractual nature of this rate is what distinguishes it from other types of investment vehicles that may have rates influenced by market conditions or trends.