Chapter 10

Question 1

An annuity that has a guaranteed minimum and provides a specified payment for the contract term.

Answer 1

Fixed Annuity

Question 2

An annuity that does not guarantee a minimum and provides variable payments at regular intervals for the contract term.

Answer 2

Variable Annuity

Question 3

A variable annuity that begins payments to the annuitant one payment period after a lump-sum deposit has been made to fund the annuity.

Answer 3

Immediate Annuity

Question 4

A variable annuity that delays payments to the annuitant for an undetermined period after the date of purchase.

Answer 4

Deferred Annuity

Question 5

While mutual fund investors buy shares, customers investing in variable annuities buy:

Answer 5

accumulation units

Question 6

A registered representative has a 33-year-old client with a stable income with no foreseeable need to access money. The client is looking for a long-term investment that will offer a guaranteed rate of return, that can also share in the performance of the stock market, and offers some form of death benefit. Which of the following investments is MOST suitable for this client?
A) A fixed annuity
B) An equity-indexed annuity
C) A variable annuity
D) A variable life insurance policy

Answer 6

B) An equity-indexed annuity

Question 7

Unit refund life annuity

Answer 7

Annuity payout option that provides the beneficiary with a lump-sum payment at the time of the annuitant’s death

Question 8

The payout from a variable annuity contract is:

Answer 8

dependent on the investment returns that are earned by the annuitant

Question 9

Which of the following factors is NOT used in determining the value of an annuity unit?
A) The assumed interest rate
B) The value of the separate account
C) Income distributions from securities held in the separate account that are reinvested
D) Capital gain distributions from securities held in the separate account that are reinvested

Answer 9

A) The assumed interest rate