An individual investor is trying to decide between a bank C.D. and an insurance company annuity. They both pay the same interest rate on an equal principal amount invested over the same period of time. Which one will be worth the most total dollars at the end of that period of time?

A. The C.D. and the annuity will both be the same, even after considering the taxes paid over the years.
B. The C.D. will be worth more because of the FDIC.
C. The annuity will be worth more because of its tax deferred characteristics.
D. The C.D. will be worth more because the insurer issuing the annuity will have paid commissions to the writing agent that must be deducted.

Ans: C. The annuity will be worth more because of its tax deferred characteristics.