Series 7 practice questionmediumPackaged Products — Variable Annuities
The death benefit in a variable annuity typically guarantees that beneficiaries will receive:
- AThe current account value only
- BThe account value plus all sales charges paid
- CDouble the original investment
- DThe greater of the account value or total premiums paid, minus prior withdrawals✓ Correct answer
Explanation
Why D — The greater of the account value or total premiums paid, minus prior withdrawals
The standard death benefit in a variable annuity guarantees that upon the annuitant's death, beneficiaries receive the greater of the current account value or the total premiums paid (minus any prior withdrawals). This protects against market losses. Some contracts offer enhanced death benefits with step-up features, typically for an additional fee.
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