Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Where are premium payments under a variable annuity held?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Variable annuity premiums are invested in a separate account of the insurer, which holds the mutual-fund-like subaccounts the owner selects. Because these assets are segregated from the general account, the owner bears the investment risk and the contract's value fluctuates with the subaccounts' performance. The general account, by contrast, supports fixed products and guarantees.
Why the other options are wrong
- B) General account assets back fixed annuities and guaranteed values; variable annuity money is kept segregated in a separate account.
- C) The separate account is maintained by the insurer, not owned directly by the annuitant as a personal custodial holding.
- D) Guaranty associations protect against insurer insolvency; they never hold policy premiums.
Memory hook
Variable money lives in the separate account — walled off from the insurer's general vault.