SIE practice questionmediumVariable Annuities — Separate Account
The separate account of a variable annuity is:
- AA bank savings account insured by the FDIC
- BGuaranteed by the insurance company's general account
- CA pooled investment account whose performance determines the annuity's value and is considered a security✓ Correct answer
- DA fixed-rate account similar to a CD
Explanation
Why C — A pooled investment account whose performance determines the annuity's value and is considered a security
The separate account holds the investment subaccounts of a variable annuity. Its performance varies with the market, which is why variable annuities are considered SECURITIES (requiring FINRA registration). The separate account is legally segregated from the insurer's general account, protecting it from the insurer's creditors. Unlike fixed annuities, returns are not guaranteed.
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