Question

Which statement defines an annuity? A. a retirement plan offered by employers B. a group of investments that many individual investors hold in common C. an investment plan that guarantees payments at regular intervals after retirement

Answer 1

C. an investment plan that guarantees payments at regular intervals after retirement.

Explanation:

We can describe annuity as a fixed amount of money that will be paid to someone each year, for the rest of their life.

It is a long term investment, designed to help protect you from the risk of outliving your income.

The amount one pays is converted into periodic payments that can last for life.

Therefore, the correct answer is option C.

Answer 2

Answer: C. an investment plan that guarantees payments at regular intervals after retirement

Explanation:

• The definition of an annuity is a sum of money or an investment that is paid at regular intervals after retirement.

Annuities are formed and sold by financial institutions, which accept and invest funds from persons and then, upon annuitization, issue a sequence of payments at a later point in time (mostly after retirement).