a variable annuity has which of the following characteristics
A) Guaranteed rate of return during accumulation period
B) Investment risk assumed by the insurance company
C) Fixed payment amount during payout period
D) Investment risk assumed by contract owner
Answer. D) Investment risk assumed by contract owner
A variable annuity is an insurance type of contract, through which the person who has the contract, is the one who takes the risk in the investment, not the insurance company. The premiums collected will go into various different subaccounts made up of mutual funds, and there is no guarantee that the growth rate during the accumulation period will be the same; instead, it depends on how the chosen assets perform. The principal owner of this contract should take the investment risk and, depending on the ups and downs of the market, profits or losses will contribute. While the time of payout is set, the sum as well change since it is determined by the account value, also impacted by the investment returns.
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