Which of the following most accurately describes the term annuity?

Question

Quizplus · Accepted Answer

An annuity is a series of equal cash flows made at regular intervals, usually monthly or annually. It can be either a fixed annuity, where the payments remain the same throughout the term, or a variable annuity, where the payments are adjusted based on the performance of underlying investments. An annuity is often used as a retirement investment tool or for providing steady income during retirement years. Option A is incorrect because increasing cash flows over time would describe a growing annuity, which is a specific type of annuity. Option B is incorrect because while an installment loan has regular payments, it does not necessarily have to be an annuity. Option D is incorrect because a term life insurance policy is a form of insurance, not an investment.

Which of the Following Most Accurately Describes the Term Annuity