Which type of annuity does not have a predetermined total payout known at the time of purchase?

The correct answer is Indexed Annuity. An indexed annuity is designed to provide returns based on the performance of a specified market index, such as the S&P 500. Unlike traditional annuities with a guaranteed payout structure, indexed annuities do not have a predetermined total payout at the time of purchase. Instead, the payout can vary depending on the performance of the index, which means that the total amount received can fluctuate.

The advantages of indexed annuities include the potential for higher returns compared to fixed annuities, as they allow for some participation in market growth while often providing a level of principal protection. However, because they are tied to the performance of an index, consumers cannot predict their total payout, as it will depend on market conditions.

In contrast, life annuities, payout annuities, and term certain annuities typically have predetermined payout structures. Life annuities guarantee income for the lifetime of the annuitant, while term certain annuities provide fixed payments for a specific period. Payout annuities often have a set amount that will be paid out based on the initial investment and agreed terms.