Under traditional fixed annuity contracts, the party who assumes the investment risk is the

Under Pennsylvania Life Insurance and annuity principles,traditional fixed annuity contractsplace theinvestment risk on the insurer, not the contract owner or annuitant. Fixed annuities guarantee a stated interest rate and provide predictable income payments.

Because the insurer promises a guaranteed minimum return and fixed payout amounts, it assumes responsibility for managing the invested funds and ensuring sufficient reserves. Even if market performance declines, the insurer must still honor the guaranteed terms of the contract.

The annuitant is the individual whose life expectancy is used to calculate benefit payments. The contract owner controls the annuity but does not bear investment risk in a fixed annuity. The beneficiary receives any remaining value upon death, if applicable.

Pennsylvania insurance study materials stress this distinction between fixed and variable annuities. In variable annuities, the investment risk is borne by the contract owner. Therefore, under traditional fixed annuity contracts, the party assuming the investment risk is theinsurer, making option D correct.