Pennsylvania Life and Health Insurance Exam Practice Question
Under traditional fixed annuity contracts, the party who assumes the investment risk is the
Correct Answer: D
Rationale: In traditional fixed annuity contracts, the insurer assumes the investment risk. This means the insurer is responsible for ensuring that the annuity pays a guaranteed return, regardless of market fluctuations.
Option A (contract owner) is incorrect because the contract owner typically invests funds but does not bear the risk of investment performance.
Option B (annuitant) is also wrong; the annuitant receives payments but does not take on investment risk.
Option C (beneficiary) is not applicable here, as the beneficiary receives benefits only upon the annuitant's death and does not engage with investment risk during the contract's life.
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