State RegulationsAZ specificDifficulty 2/5
An Arizona contract holder returns a variable annuity within the free-look period. Under A.R.S. 20-1233, the refund equals:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under A.R.S. 20-1233, the refund for a returned variable annuity equals the premiums paid, minus the amounts allocated to separate accounts, plus the separate-account value when the returned contract is received. Because separate-account performance fluctuates with the market, the statute reconstructs the buyer's money by adding back the current account value instead of promising a flat return of premiums.
Why the other options are wrong
- B) Gains since issue are not added; the formula uses the separate-account value at the time the returned contract is received, not accumulated gains.
- C) The refund is not limited to fixed-account interest; A.R.S. 20-1233 builds the variable refund from premiums and separate-account value.
- D) The formula starts from premiums paid and subtracts separate-account allocations; it is not a stand-alone account-value payment.
Memory hook
Variable refund math: premiums in, separate-account money out, valued on receipt.