Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under a group annuity contract, the employer or plan sponsor typically holds the master contract while each participating employee receives:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Like group life insurance, a group annuity is issued as a master contract to the employer, union, or other plan sponsor, and each participating employee receives a certificate summarizing the benefits and rights. The master contract sets the terms; the certificate evidences participation. Group annuities are widely used to fund employer retirement plans, including qualified plans.
Why the other options are wrong
- B) Participants receive certificates, not individual annuity contracts; individual contracts would defeat the group structure and its economies.
- C) Variable group annuity accounts carry market risk; no such guarantee exists for investment performance.
- D) The plan sponsor holds the master contract; participants do not own the master contract or its assets directly.
Memory hook
Group annuity = one master contract in the sponsor's hands, certificates in the employees' files.