What best describes the effect on a variable annuity when actual performance equals the assumed rate?

• A. The benefits decrease
• B. The benefits remain the same
• C. The benefits increase
• D. The policy terminates

Answer: (B)

The main idea is that the assumed rate is the benchmark used to illustrate expected growth for a variable annuity. When actual performance matches that rate, the account value grows exactly as projected, so the benefits stay at the level shown in the illustration. In other words, there’s no surprise gain or loss—the benefits remain the same as expected. If actual performance were higher or lower, benefits could increase or decrease accordingly, but matching the assumed rate means the projected benefits are realized.