A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n)
A) annuity.
B) fixed dividend plan.
C) mutual fund.
D) level premium agreement.

Question

Quizplus · Accepted Answer

An annuity is a contract between an individual and an insurance company that guarantees regular payments for a fixed period of time, usually for the individual's lifetime. The payments can be made monthly, quarterly, semi-annually, or annually. An annuity is often used as a retirement income tool to provide a steady stream of income in retirement. Option B) Fixed dividend plan is not correct because it refers to a type of investment plan where dividends pay out a fixed amount to shareholders. Option C) Mutual fund is not a contract for regular payments, it is a type of investment vehicle where individuals pool their money together to invest in a portfolio of stocks, bonds or other securities. Option D) Level premium agreement is not correct as it refers to a type of life insurance policy where premiums remain the same throughout the life of the policy.

A Contract That Calls for Regular Payments to an Individual