A 45 year old woman won $100,000 in a scratch off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?

A 45 year old woman won $100,000 in a scratch off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?

• A. Immediate Variable Annuity
• B. Deferred Fixed Annuity
• C. Fixed Indexed Annuity
• D. Immediate Fixed Annuity

Answer: (B)

The correct choice is a Deferred Fixed Annuity. This type of annuity is characterized by its structure of accumulating funds over time before beginning to distribute payments to the annuitant. In this case, the woman is 45 years old and will not start receiving payments until she reaches age 60, indicating that this is a deferred annuity, as the payments are postponed for a period of time. Additionally, the payments she will receive, which are fixed at $1,500 per month, identify the annuity as fixed. This means the payment amounts are guaranteed and will not fluctuate with market conditions, unlike variable annuities, which can have payment amounts that vary based on investment performance. To summarize, the annuity specifically matches the characteristics of a Deferred Fixed Annuity due to the deferred start date for her monthly payments and the fixed nature of those payments.

The correct choice is a Deferred Fixed Annuity. This type of annuity is characterized by its structure of accumulating funds over time before beginning to distribute payments to the annuitant. In this case, the woman is 45 years old and will not start receiving payments until she reaches age 60, indicating that this is a deferred annuity, as the payments are postponed for a period of time.

Additionally, the payments she will receive, which are fixed at $1,500 per month, identify the annuity as fixed. This means the payment amounts are guaranteed and will not fluctuate with market conditions, unlike variable annuities, which can have payment amounts that vary based on investment performance.

To summarize, the annuity specifically matches the characteristics of a Deferred Fixed Annuity due to the deferred start date for her monthly payments and the fixed nature of those payments.