Which of the following statements best describes Variable Annuities?

Variable annuities are designed to provide individuals with a stream of income that can fluctuate based on the performance of the investments chosen within the annuity. This characteristic is reflected in the correct choice, which states that payments can vary from one period to another. Unlike fixed annuities, where the payment amount is predetermined and guaranteed, variable annuities allow for potential growth (or decline) depending on the underlying investment options, which may include stocks, bonds, or mutual funds.

This variability means that the income can increase if the investments perform well, or it can decrease during poor market conditions, making the annuity a more dynamic investment vehicle. Therefore, it is essential for investors to understand that they bear some risk associated with their investment choices in such annuities.

In contrast, statements suggesting guaranteed fixed payments or that variable annuities don't require licensing overlook the key regulatory requirements for selling these financial products, as well as the fundamental nature of variable annuities as investment vehicles. Additionally, claims regarding tax deductions are misleading, as the tax treatment of annuities depends on various factors and does not traditionally offer deductions to the seller.