Insurance Contracts 4%

Question 0

accumulation units - VA

Answer 0

-the build during deferred period

Question 1

Annuitant’s investment objective with a VA

Answer 1

lifetime income that will likely keep up with inflation

Question 2

annuity unit - VA

Answer 2

number of units per payment period

Question 3

Straight-life annuity (life only of Life income)

Answer 3

• highest periodic payment
• carries most risk
• if annuitant dies, that’s it

Question 4

Life annuity with period certain

Answer 4

• if annuitant dies during period certain, beneficiary receives payments for remainder of period
• once period is over, annuitant continues to receive till passing

Question 5

Period Certain (fixed period)

Answer 5

-if annuitant dies during period certain, beneficiary receives payments for remainder of period

Question 6

Unit refund life annuity

Answer 6

• periodic payments during annuitant’s lifetime
• if annuitant dies prior to receiving an amount equal to the value of the annuity units, the remaining portion will be paid in a lump sum or installments to the beneficiary

Question 7

Joint and last survivor life annuity

Answer 7

-payments are made to 2 people. if one annuitant dies, payments continue to the surviving annuitant.

Question 8

mortality guarantee

Answer 8

• the insurance company deducts a mortality expense risk fee from the separate account to protect itself against an annuitant outliving their expected mortality
• co guarantees that it will make payments as long as the annuitant lives through the mortality guarantee

Question 9

expense guarantee

Answer 9

-establishes the max that they can charge the contract

Question 10

operating expense risk fee

Answer 10

deducted from the separate account to protect the company against rising operating expenses

Question 11

Death Benefit

Answer 11

will receive the greater of the gross payments or accumulated value

Question 12

Exchange Privilege - 1035

Answer 12

• life insurance to another life insurance contract
• life insurance contract to an annuity
• an endowment contract to an annuity contract
• an annuity contract to an annuity contract

Question 13

Variable Life - Loans

Answer 13

• insurance co must allow a min of 75% of cash value after the policy has been in force for 3 years
• if the remaining cash value goes negative, the policy holder has 31 days to pay back enough of the loan to bring the value of the contract positive

Question 14

Conversion Privilege - Variable Life

Answer 14

-must allow conversion to another policy, wl or ul, for the first 2 years without having the insured provide any additional evidence of insurability

Question 15

Sales Charge and Expenses - Variable Life

Answer 15

• max sales charge is 9% computed over 20 years
• free look period is 45 days
• during the first year, the max sales charge is 50% of the premium paid
• if a policy-owner surrenders during the first 2 policy years, the owner is entitled to the NAV of their account plus a refund of any charge that exceeds 30% of the first years premium plus any charge that exceeds 10% of the second year’s premium

Question 16

When is cash value usually, and when must it be calculated - variable life

Answer 16

-usually daily and at least monthly

Question 17

death benefits - VL

Answer 17

• guaranteed min death benefit
• actual death benefit is determined by the performance of the separate account
  
  • AIR - stated in the policy, if performance is greater, db is greater
• must be recalculated at least annually