Which type of annuity provides a guaranteed fixed interest rate?

A fixed annuity provides a guaranteed fixed interest rate, making it an attractive option for individuals seeking stability and predictability in their investment returns. With a fixed annuity, the insurer agrees to pay the policyholder a specified interest rate for a predetermined period or for the entire duration of the contract. This provides the annuitant with a sense of security, knowing that their investment will grow at a consistent rate, regardless of market fluctuations.

In contrast, other types of annuities, such as variable annuities, do not guarantee a fixed rate of return. Instead, they allow the policyholder to invest in various investment options, and the returns can fluctuate based on market performance. Immediate and deferred annuities can also come in both fixed and variable forms; however, the key characteristic of fixed annuities is the assurance of a predetermined interest rate, which is not applicable to immediate or deferred annuities unless specifically specified. Thus, the fixed annuity stands out for its guaranteed interest rate feature.