Question

Which of the following statements is/are TRUE about a variable annuity contract?
(A) Annuity payments to an annuitant may increase or decrease during the annuity period
(B) The annuitant gives up control over the principal upon the commencement of annuity payments
(C) If an annuitant selects a 10 year certain annuity option, he or his beneficiary will receive annuity payments for at least 10 years
(D) All of the above

Answer 1

Answer:

The answer is: D) All of the above

Explanation:

The characteristics of a variable annuity contract are:

1. earnings are tax deferred and reinvested
2. they offer a Guaranteed minimum death benefit (GMDB)
3. depending on the annuity payout option the beneficiary takes, they can provide guaranteed income for life

The beneficiary can decide between different annuity options. Annuity payments can vary depending on the account's earnings.

Answer 2

Answer:

The best answer to the question: Which of the following statements is/are TRUE about a variable annuity contract, would be, D: All of the above.

Explanation:

A variable annuity contract is basically and agreement between a client and an insurance company in which the client will be able to save up part of his/her capital, and make some monetary gains from investement, as well as be able as withdraw part of that monetary gain, under the supervision and hallmarks of the insurance company and the program that has been selected. Unlike the fixed annuity, the variable allows for some more freedoms for the client, although it is also a riskier form of saving, as in the end, there may be no return from investment.

Given that, from all the statements in this question, all of them are part and parcel of what a variable annuity contract is, and therefore, instead of saying all of them are true, we choose D, which involves them all.