The ShurGro variable annuity uses an AIR of 3% for those contract holders who are in the annuity stage. The past few months, the actual returns created by the separate account have been, respectively; 6%, 5.5%, 4% and 3.5%. Which of the following is a true statement regarding the payouts to annuitants?
A) Payments have not been affected
B) Payments have increased
C) Payments have steadily decreased
D) Payments have remained level
The correct answer is b.
Any time the actual growth rate of the separate account
exceeds the account’s AIR, the payment will
increase compared to the previous month’s payment.
Note that the mathematical reason for this is far
beyond the scope of Series 6 exam.
MORE FAQS

What are the main kinds of annuities?

For what types of financial instruments would I want to calculate the present value of an annuity?

What is an annuity?

What is the difference between a fixed and variable annuity?

In the separate account of a variable annuity, which of the following characteristics apply to annuity ...

How are variable annuities taxed at death?

What are the risks of annuities in a recession?

How liquid are variable annuities?

Are variable annuities a good retirement investment?

Are variable annuities safe?

How safe are variable annuities?

What is the difference between the present value of an annuity and the future value of an annuity?

Can a variable annuity be rolled into an IRA?

What happens to my annuity after I die?

Federal student loan rates: who sets them, why they vary

How are you taxed after selling a mutual fund in a Roth IRA?

Can I take my 401(k) to buy a house?

How do I calculate my gains and/or losses when I sell a stock?

How do I calculate my Social Security breakeven age?

Are high yield bonds a good investment?
RELATED FAQS

What are the main kinds of annuities?
Learn about the four basic types of annuities, and why the different investment and payout options are suitable for different ... 
For what types of financial instruments would I want to calculate the present value ...
Learn about the types of financial instruments the present value of an annuity calculation is most useful for, including ... 
What is an annuity?
An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments ... 
What is the difference between a fixed and variable annuity?
Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks ... 
In the separate account of a variable annuity, which of the following characteristics ...
The correct answer is b. When the holder of a variable annuity contract annuitizes the contract, he/she is asking that the ... 
How are variable annuities taxed at death?
Find out how variable annuities are taxed after the death of an annuitant, including an explanation of the various payment ...

Deferred Payment Annuity
An annuity where the payments received will start some time in ... 
Whole Life Annuity Due
A financial product sold by insurance companies that requires ... 
Immediate Payment Annuity
An annuity contract that is purchased with a single lumpsum ... 
Annuity Consideration
The money that an individual pays to an insurance company in ... 
Delayed Annuity
An annuity in which the first payment is paid at a later date ... 
Annuity Due
An annuity whose payment is to be made immediately, rather than ...