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Guaranteed-Dollar Annuity

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guaranteed-dollar annuity

Guaranteed-Dollar Annuity
An annuity that allows the annuitant a fixed return for the life of the annuity. Like any annuity, the annuitant buys into a policy, either with a lump sum or premiums over a period of time. When the annuitant reaches a certain age or retirement (whichever is greater), he/she begins to receive payments. Generally speaking, the insurance company issuing a fixed annuity invests the premiums in low risk investment vehicles such as bonds. This results in a smaller likelihood that the insurance company will be unable to make the payments, but also exposes the annuitant to inflation risk. It is more commonly called a fixed annuity. See also: Variable annuity.


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