Certified Financial Consultant (CFC) Practice Exam

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What does a modified guaranteed annuity typically provide?

Variable interest rates based on market performance
Owner guaranteed a fixed interest rate for a specific time
A one-time lump sum payment
No interest payments during the entire term

The correct answer is: Owner guaranteed a fixed interest rate for a specific time

A modified guaranteed annuity typically provides the owner with a guaranteed fixed interest rate for a specified period. This means that during that timeframe, the owner can expect a consistent return on their investment, which offers a layer of security and predictability in their financial planning. This type of annuity usually allows the owner the opportunity for potential growth through fixed rates, which may change after the initial guarantee period ends, but the certainty of income during the guaranteed period is a central feature. The predictable returns make it appealing to individuals seeking a balance of safety and growth, distinguishing it from options that might offer variable interest rates that depend on market performance or those that do not provide any interest payments at all.