Which statement about variable annuities is correct?

• A. They are not securities
• B. Payments are fixed and not influenced by account value
• C. They are considered securities
• D. They guarantee inflation-adjusted payments

Answer: (C)

Variable annuities blend insurance with an investment component, and the payments you receive depend on how the separate account performs. Because the contract’s value and future payments hinge on investment results in the subaccounts, the product is treated as a security for regulatory purposes—the investor bears the investment risk rather than the insurer guaranteeing fixed payments. That’s why the statement that they are considered securities is correct.

The other ideas don’t fit: payments are not fixed and shielded from account value—there is exposure to market performance; inflation-adjusted payments aren’t guaranteed by the basic contract (inflation riders exist but aren’t automatic); and saying they are not securities conflicts with the security-like features of the investment component.