Florida Life and Health Insurance License Practice Test

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Which of the following is a characteristic of a variable annuity?

  1. Guaranteed interest rate

  2. Fixed payout amounts

  3. Underlying equity investments

  4. Predefined beneficiary payout

The correct answer is: Underlying equity investments

A variable annuity is a type of investment product that allows individuals to invest their money in a variety of investment options, with the potential for growth over time. Unlike a fixed annuity where the interest rate is guaranteed, a variable annuity does not offer a guaranteed interest rate. This means that the return on investment is not fixed and can vary based on the performance of the underlying investments. Fixed payout amounts and predefined beneficiary payouts are also characteristics of a fixed annuity, not a variable annuity. The key characteristic of a variable annuity is the underlying equity investments, which give investors the potential for higher returns but also carry more risk.

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