I. Surrender Changes -
II. Mortality and Expense risk change
III. Administrative Fees -
IV. Underlying funds expenses -
V. Fees charges for other features
These are the charges which investors pay when they invest in:
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A. B. C. D.A
The charges listed in the question are commonly associated with variable annuities, which is option A.
Variable annuities are insurance contracts that allow investors to invest their money in various underlying investment options, such as mutual funds. The performance of these underlying investments will determine the value of the annuity.
I. Surrender Charges: This fee is charged by the insurance company when an investor withdraws money from the annuity within a certain period, known as the surrender period. This period can vary, but typically lasts from 5 to 10 years. Surrender charges are designed to discourage investors from withdrawing their money too soon and to help the insurance company recoup the costs associated with issuing the annuity.
II. Mortality and Expense Risk Charge: This charge is deducted on a regular basis from the annuity's account value to cover the insurance company's costs associated with providing death benefits and maintaining the annuity.
III. Administrative Fees: These fees cover the insurance company's administrative costs, such as recordkeeping and customer service.
IV. Underlying Funds Expenses: This refers to the expenses associated with the underlying investment options, such as mutual funds, in which the annuity's money is invested. These expenses can include management fees, 12b-1 fees, and other operating expenses.
V. Fees for Other Features: Variable annuities can come with additional features, such as guaranteed income riders, long-term care riders, or other optional benefits. These features typically come with additional fees.
Fixed annuities, on the other hand, do not have underlying investment options and therefore do not have underlying fund expenses. They may have surrender charges and administrative fees, but mortality and expense risk charges and fees for other features are not typically associated with fixed annuities.
Mixed annuities, also known as indexed annuities, are a hybrid of fixed and variable annuities. They offer the potential for higher returns than fixed annuities, but with less risk than variable annuities. Mixed annuities may have some of the charges listed in the question, depending on their structure.
Therefore, the correct answer to the question is A, variable annuity.