How is an annuity with a guaranteed income feature affected during a market downturn?

An annuity with a guaranteed income feature provides a level of security for the policyholder, especially in fluctuating market conditions. During a market downturn, it's common for the account value of the investments within the annuity to decrease due to declines in the market. However, the key aspect of the guaranteed income feature is that it ensures the holder will receive a specified income amount regardless of the performance of the investment component linked to the annuity.

Thus, while the overall account value can be affected negatively during downturns, the income paid out remains stable and is not contingent on market performance. This structure helps investors manage their financial commitments without the fear of their income streams being disrupted by temporary market conditions. The guarantee is designed to provide financial security, which is particularly valuable in times of economic uncertainty.

The other options misrepresent the nature and protections typically included in annuities with guaranteed income features. The income guarantees are designed to withstand market fluctuations, reinforcing their essential role in financial planning.