What type of annuity provides a guaranteed interest rate during accumulation?

A fixed annuity is designed to provide a guaranteed interest rate during the accumulation phase. This means that the amount of interest that your investment will earn is predetermined and will not fluctuate based on market conditions. Consequently, individuals can have a level of certainty regarding their investment growth, making fixed annuities a popular choice for those seeking steady and predictable returns.

Guaranteed payout annuities focus on the distribution phase, whereby they provide set payments to the annuitant, not during the accumulation of funds. Flexible premium annuities allow for varying contributions over time but do not guarantee a specific interest rate; they are more variable in nature. Variable annuities, on the other hand, offer investment options that can change in value based on the performance of underlying investments, which means there is no guarantee of a fixed interest rate during accumulation.

In summary, the correct choice reflects the primary characteristic of fixed annuities: offering a guaranteed interest rate that provides stability and predictability during the accumulation phase of the investment.