Products & Their RisksQuestion 81 of 398
During the pay-in (accumulation) phase of a variable annuity, an investor's contributions purchase:
a.Annuity units that determine the size of monthly payouts
b.Shares of the insurer's general account stock
c.Accumulation units, whose number is fixed at annuitization to compute annuity units
d.Guaranteed interest certificates redeemable at par
Explanation
In the accumulation phase, contributions buy accumulation units whose value fluctuates with the separate account's performance. At annuitization, the accumulated value is converted into a fixed number of annuity units, and the value of each annuity unit then determines the varying monthly payment during the payout phase.
Law Reference: Investment Company Act of 1940Practice all 398 questions free — no signup required.
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