SIE practice questionhardVariable Annuities
A key risk associated with variable annuities, but not with fixed annuities, is:
- AFixed periodic payments regardless of investment performance
- BThe client's investment return is not guaranteed and may fluctuate✓ Correct answer
- CPayments are insured by the FDIC
- DPrincipal is guaranteed by the insurance company
Explanation
Why B — The client's investment return is not guaranteed and may fluctuate
Variable annuity returns can fluctuate because they depend on the performance of selected subaccounts. Fixed periodic payments and principal guarantees are fixed-annuity features, and annuities are not FDIC-insured.
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