Which of the following most accurately describes the annuity?

Question

Quizplus · Accepted Answer

An annuity refers to a series of equal payments made at equal intervals of time. It could be either fixed or variable, and could be for a fixed term or for the lifetime of an individual. Annuities are commonly used as a form of retirement income or as a means of saving and investing for the future. Option A is incorrect because there are fixed and variable annuities that have the same cash flows over time or even decreasing cash flows. Option B is incorrect because although an annuity could have amortizing principal payments, it's not the defining characteristic of an annuity. Option D is incorrect because a term life insurance policy refers to a policy that pays a death benefit to a beneficiary if the insured passes away during the specified term of the policy, and doesn't involve any periodic payments.

Which of the Following Most Accurately Describes the Annuity