Which of the following is an annuity that is linked to a market-related index?

• A. Equity-indexed annuity
• B. Fixed annuity
• C. Variable annuity with stock funds
• D. Immediate annuity

Answer: (A)

An annuity linked to a market-related index is one where the interest credited to the contract depends on the performance of a stock market index, rather than a fixed guaranteed rate. The equity-indexed annuity fits this description because it offers principal protection and a guaranteed minimum return, but adds upside based on the index’s gains, often with a cap, spread, or participation rate. This means you can benefit from market gains without directly investing in stocks.

The other options don’t fit this linkage: a fixed annuity provides a guaranteed fixed rate with no index connection; a variable annuity uses subaccounts that invest in stocks or bonds and mirrors market performance more directly through those investments rather than a specific index linkage; and an immediate annuity is about when payments begin, not how returns are determined.