Pass the Insurance Licensing Arizona Department of Insurance AZ-Insurance-Producer-Life Questions and answers with Dumpstech

A variable annuity places accumulation values in one or more separate-account investment options. Because those values fluctuate according to investment performance, the contract owner bears the investment risk. During annuitization, the number of annuity units generally becomes fixed, while the dollar value of those units can fluctuate with the performance of the underlying separate account. Consequently, variable annuity income is not inherently fixed and guaranteed.

That makes D the statement that is NOT characteristic of a variable annuity. A fixed annuity is the product more directly associated with guaranteed fixed-dollar income backed by the insurer ' s claims-paying ability.

Variable annuities are also securities products. Arizona law requires a person selling variable contracts to hold the appropriate life insurance producer authority and satisfy applicable securities-registration requirements. Arizona specifically requires evidence of FINRA licensing or registration for persons selling variable contracts.

The separate-account structure is equally important because the assets supporting variable benefits are segregated from the insurer ' s general account and investment results are passed through to the contract owner.

Study Guide Reference: Annuities — variable annuities; separate accounts; investment risk; variable annuitization; securities regulation.