Products & RisksQuestion 24 of 125
A variable annuity's separate account value during the accumulation phase depends on:
a.A fixed rate guaranteed by the insurer
b.The prime interest rate
c.The consumer price index only
d.The investment performance of the subaccounts selected by the contract owner
Explanation
In a variable annuity, premiums are allocated to separate account subaccounts (similar to mutual funds), and the account value fluctuates with the investment performance of those subaccounts. The investor bears the investment risk, unlike a fixed annuity where the insurer guarantees a set rate.
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