Applying AIR to a variable annuity affects which components?

Applying AIR to a variable annuity affects which components?

• A. The variable annuity unit value and any payments
• B. The variable accumulation value
• C. The separate account return below AIR
• D. The guaranteed death benefit

Answer: (A)

AIR, the assumed interest rate, is used to price and credit guaranteed features within a variable annuity. When you apply AIR, it directly influences how much is credited per unit and the guaranteed payments that can be taken from the contract. That means the variable annuity unit value—the price of a unit in the contract’s subaccounts—and any payments tied to guarantees are affected. The underlying accumulation value, which tracks actual market performance, isn’t set by AIR, and the separate account’s actual return isn’t dictated by the AIR assumption. Likewise, the guaranteed death benefit is determined by the contract’s terms and rider provisions, not directly by applying AIR in this way. So the effect is on the unit value and the guaranteed payments.

AIR, the assumed interest rate, is used to price and credit guaranteed features within a variable annuity. When you apply AIR, it directly influences how much is credited per unit and the guaranteed payments that can be taken from the contract. That means the variable annuity unit value—the price of a unit in the contract’s subaccounts—and any payments tied to guarantees are affected. The underlying accumulation value, which tracks actual market performance, isn’t set by AIR, and the separate account’s actual return isn’t dictated by the AIR assumption. Likewise, the guaranteed death benefit is determined by the contract’s terms and rider provisions, not directly by applying AIR in this way. So the effect is on the unit value and the guaranteed payments.