Which statement accurately defines a prospectus?

Which statement accurately defines a prospectus?

• A. A detailed summary of the SEC registration for a security that must be provided to the prospect before any sale
• B. A list of investment portfolios
• C. An annuity option
• D. A contract rider

Answer: (D)

A prospectus is a formal disclosure document filed with the SEC that describes the security and the investment offering. It must be provided to the prospective investor before any sale so the investor can review key details like the investment objectives, risks, fees, charges, and performance information. In the context of variable annuities, the prospectus is the primary source of information about the separate account options and their costs, separate from the contract itself. A contract rider is simply an amendment attached to the policy, not the disclosure document. A list of investment portfolios is not the definition of a prospectus, and an annuity option is a feature within the contract, not the document that discloses essential information.

A prospectus is a formal disclosure document filed with the SEC that describes the security and the investment offering. It must be provided to the prospective investor before any sale so the investor can review key details like the investment objectives, risks, fees, charges, and performance information. In the context of variable annuities, the prospectus is the primary source of information about the separate account options and their costs, separate from the contract itself. A contract rider is simply an amendment attached to the policy, not the disclosure document. A list of investment portfolios is not the definition of a prospectus, and an annuity option is a feature within the contract, not the document that discloses essential information.