SIE practice questionmediumVariable Annuities
A key risk of variable annuities compared to fixed annuities is:
- APremium payments are variable.
- BThe insurance company guarantees a fixed return.
- CThe value of the annuity fluctuates with the performance of underlying investments.✓ Correct answer
- DNo suitability requirements apply.
Explanation
Why C — The value of the annuity fluctuates with the performance of underlying investments.
Variable annuities expose the investor to market risk based on subaccount performance. Fixed annuities guarantee returns, and premium payments and suitability requirements exist for both.
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