A client of an IAR mentions that he has received a prospectus for a variable annuity, but does not really understand the product. It would be reasonable for the IAR to explain that a variable annuity offers an investor:
A) a product very similar to a mutual fund, but with lower costs and expenses.
B) the insurance company's backing of the annuity' performance.
C) the opportunity to invest in equity securities on a tax-deferred basis.
D) lifetime income guaranteed never to drop below the initial rate.
Answer: C) the opportunity to invest in equity securities on a tax-deferred basis.