Do variable products guarantee any minimum rate of return?

Do variable products guarantee any minimum rate of return?

• A. There is a minimum rate of return guaranteed by the insurer.
• B. The return is guaranteed to not drop below the initial premium.
• C. There is no minimum rate of return; investment risk is borne by the owner.
• D. The return is always positive.

Answer: (C)

In variable products, the money you invest isn’t locked in with a guaranteed minimum return. The growth comes from the performance of the separate investment accounts, which are exposed to market risk. That means you can gain if markets perform well, or lose value if they don’t, and there’s no floor that guarantees you’ll earn a minimum rate of return. The insurer isn’t promising a minimum return on the cash value; any guarantees typically come only from optional riders (like protection features) and usually at extra cost, or from unrelated guarantees such as a death benefit. So, the investment risk rests with you, the owner, rather than being guaranteed by the insurer.

In variable products, the money you invest isn’t locked in with a guaranteed minimum return. The growth comes from the performance of the separate investment accounts, which are exposed to market risk. That means you can gain if markets perform well, or lose value if they don’t, and there’s no floor that guarantees you’ll earn a minimum rate of return. The insurer isn’t promising a minimum return on the cash value; any guarantees typically come only from optional riders (like protection features) and usually at extra cost, or from unrelated guarantees such as a death benefit. So, the investment risk rests with you, the owner, rather than being guaranteed by the insurer.