What type of annuity provides benefits based on units rather than fixed dollar amounts?

What type of annuity provides benefits based on units rather than fixed dollar amounts?

• A. Fixed Annuity
• B. Index Annuity
• C. Variable Annuity
• D. Participating Annuity

Answer: (C)

A variable annuity provides benefits based on units rather than fixed dollar amounts. In a variable annuity, the payouts are determined by the performance of investments that the owner chooses from a range of options, typically mutual funds. This means that the value of the annuity can fluctuate over time, reflecting the gains or losses of the underlying investments. Therefore, the annuitant receives benefits that can vary significantly, as they are tied to the performance of the chosen investments rather than being guaranteed at a fixed rate. This characteristic distinguishes variable annuities from fixed annuities, which provide predetermined payouts.

A variable annuity provides benefits based on units rather than fixed dollar amounts. In a variable annuity, the payouts are determined by the performance of investments that the owner chooses from a range of options, typically mutual funds. This means that the value of the annuity can fluctuate over time, reflecting the gains or losses of the underlying investments. Therefore, the annuitant receives benefits that can vary significantly, as they are tied to the performance of the chosen investments rather than being guaranteed at a fixed rate. This characteristic distinguishes variable annuities from fixed annuities, which provide predetermined payouts.