SIE practice questionmediumVariable Annuities
Which of the following is a unique risk of variable annuities compared to fixed annuities?
- AInterest rate risk is eliminated
- BInvestment risk is borne by the contract owner✓ Correct answer
- CPayments are guaranteed by the U.S. government
- DDeath benefits are always higher than premiums paid
Explanation
Why B — Investment risk is borne by the contract owner
In a variable annuity, the contract owner bears investment risk because returns depend on the selected subaccounts. Fixed annuities credit a stated rate, and annuities are not guaranteed by the U.S. government or FDIC.
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