State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
During the 30-day cancellation period for a variable annuity sold to a senior citizen, the premium may be invested:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 10127.10 provides that during the 30-day cancellation period, premiums for an individual variable annuity contract may be invested only in fixed-income investments and money-market funds — unless the owner specifically directs that the premium be invested in the mutual funds underlying the contract. If the owner does not direct fund investment and cancels, the full premium and policy fee are refunded; if directed, the owner receives the account value, which may be less than the premium paid.
Why the other options are wrong
- B) Aggressive stock investment during the cancellation window would defeat the protection of the senior free-look right and is not permitted absent owner direction.
- C) Investment direction during the cancellation period is the owner's choice, never the producer's unilateral selection.
- D) Premiums may be invested during the cancellation period, but only in the conservative vehicles described unless the owner directs otherwise.
Memory hook
Senior variable annuity, first 30 days: parking lot only — fixed and money-market — unless the owner says otherwise.