In a combination annuity, where are the fixed portion and variable portion invested respectively?

In a combination annuity, where are the fixed portion and variable portion invested respectively?

• A. Fixed portion goes to the general account; variable portion goes to the separate account
• B. Fixed portion goes to the separate account; variable portion goes to the general account
• C. Both portions go to the general account
• D. Both portions go to the separate account

Answer: (A)

In a combination annuity, you have a guaranteed, fixed portion and a market-linked, variable portion. The fixed portion is funded from the insurer’s general account, which means the insurer guarantees a minimum payout for that part and bears the investment risk. The variable portion is placed in the separate account, dedicated to the contract’s investments and tied to the performance of chosen investment options; its value can rise or fall with the market and is not guaranteed. So the fixed portion goes to the general account for guaranteed protection, while the variable portion goes to the separate account for potential growth with investment risk.

In a combination annuity, you have a guaranteed, fixed portion and a market-linked, variable portion. The fixed portion is funded from the insurer’s general account, which means the insurer guarantees a minimum payout for that part and bears the investment risk. The variable portion is placed in the separate account, dedicated to the contract’s investments and tied to the performance of chosen investment options; its value can rise or fall with the market and is not guaranteed. So the fixed portion goes to the general account for guaranteed protection, while the variable portion goes to the separate account for potential growth with investment risk.