Variable Annuity: An annuity in which the accumulation and benefit payments fluctuate according to the investment experience of the separate account.

Variable Annuity: An annuity in which the accumulation and benefit payments fluctuate according to the investment experience of the separate account.

• A. A fixed-payment annuity guaranteed for life
• B. An annuity in which the accumulation and benefit payments fluctuate according to the investment experience of the separate account
• C. A single-premium immediate annuity
• D. A term-certain annuity

Answer: (B)

A variable annuity is an annuity whose accumulation value and future payments depend on the investment performance of the separate account. Money goes into a portfolio of investments inside this separate account, and as those investments go up or down, the value of the contract grows or shrinks, and the payments can fluctuate accordingly. This distinguishes it from fixed annuities, where the insurer guarantees a set payout and a fixed growth rate, from immediate annuities, which typically start payments right away and are commonly fixed, and from term-certain annuities, which pay for a specified period regardless of investment results. So the description matches a variable annuity precisely because both accumulation and benefit payments fluctuate with the separate account’s investment experience.

A variable annuity is an annuity whose accumulation value and future payments depend on the investment performance of the separate account. Money goes into a portfolio of investments inside this separate account, and as those investments go up or down, the value of the contract grows or shrinks, and the payments can fluctuate accordingly. This distinguishes it from fixed annuities, where the insurer guarantees a set payout and a fixed growth rate, from immediate annuities, which typically start payments right away and are commonly fixed, and from term-certain annuities, which pay for a specified period regardless of investment results. So the description matches a variable annuity precisely because both accumulation and benefit payments fluctuate with the separate account’s investment experience.