What is a defining feature of a fixed annuity?

A defining feature of a fixed annuity is the guaranteed return on the investment. This means that the annuity offers a predictable income stream and a specified interest rate, ensuring that the policyholder can expect to receive a certain amount of interest over time, regardless of market fluctuations. This guarantee provides stability and security, making fixed annuities particularly appealing to conservative investors or those seeking a reliable income during retirement.

The other options highlight characteristics associated with different types of annuities or investments. For instance, returns based on stock market performance pertains to variable annuities, where the returns can vary based on the underlying investment choices. Variable payment amounts refer to the uncertainty of income associated with these variable annuities. Lastly, high-risk investment options are not a feature of fixed annuities, which are designed to minimize risk and provide safe investment alternatives. This focus on guaranteed returns distinguishes fixed annuities from other financial products.