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Zorluk: OrtaAnnuities and Insurance-Based Products

An investor who is planning for retirement is comparing the structural features and risk profiles of fixed annuities and variable annuities. Which of the following statements correctly distinguishes the investment risk and account assets between these two products?

  1. In a fixed annuity, the insurance company bears the investment risk and holds assets in its general account, whereas in a variable annuity, the contract owner bears the investment risk with assets held in a separate account.Cevap
  2. B
    In a variable annuity, the insurance company guarantees a minimum fixed return from its general account, while fixed annuity payouts fluctuate based on subaccount performance.
  3. C
    Both fixed and variable annuity assets are maintained in the insurer's separate account, but fixed annuities are registered as securities with the SEC.
  4. D
    In a fixed annuity, the contract owner bears market risk because interest rates are adjusted daily to match benchmark inflation indexes.

Cevap

In a fixed annuity, the insurance company bears the investment risk and holds assets in its general account, whereas in a variable annuity, the contract owner bears the investment risk with assets held in a separate account.
The statement accurately reflects the fundamental structural distinction between fixed and variable annuities. Fixed annuities place investment risk on the issuing insurance company, which backs guaranteed payouts using its general account. Variable annuities place investment risk on the contract owner, who selects subaccounts managed within a separate account registered with the SEC.

Adım Adım Çözüm

1
Analyze the account structure of a fixed annuity
Fixed annuity premiums are placed into the insurance company's general account. The insurance company promises a fixed rate of return and absorbs all investment risk.
Understanding where premiums flow determines who bears the financial risk.
2
Analyze the account structure of a variable annuity
Variable annuity premiums are directed into a separate account divided into subaccounts (similar to mutual funds). The contract value fluctuates with market performance, placing investment risk on the contract owner.
Separate account regulation requires variable annuity products to be registered as securities.
3
Compare the statements to select the correct distinction
The option identifying that the insurer bears investment risk in the general account for fixed annuities, while the owner bears investment risk in the separate account for variable annuities, is correct.
This accurately reflects FINRA and SEC regulatory definitions for insurance-based products.

Anahtar Kavram

General Account vs. Separate Account Risk Allocation in Annuities
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Konular

Annuities and Insurance-Based Products

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