Fixed annuities are described as being commingled with the insurer's general assets and typically guarantee a minimum interest rate.

• A. They invest in separate accounts and track market returns
• B. They are funded by the policyholder's life settlement
• C. They are commingled with the insurer's general assets and typically guarantee a minimum interest rate
• D. They have no surrender charges

Answer: (C)

Fixed annuities provide a predictable, guaranteed return because the funds are placed in the insurer’s general account. The insurer pools these products with its other general assets and commits to a minimum interest rate, so the crediting rate is protected from market fluctuations. The insurer bears the investment risk, not the purchaser. This is different from variable annuities, where the contract is funded by separate accounts and the returns depend on market performance. While many deferred fixed annuities do charge surrender penalties for early withdrawals, the essential point about fixed annuities is the general-account backing and the guaranteed minimum rate.