Unit 28

Question 0

The period of time from a variable annuity contract’s issue date until the state of payments is known as:

(A) the deductible period
(B) the accumulation period
(C) the probationary period
(D) the funding period

Answer 0

(B) the accumulation period

Question 1

Which of the following is one of the basic types of variable annuity?

(A) Delayed
(B) Guaranteed
(C) Immediate
(D) Retirement

Answer 1

(C) Immediate

Question 2

Heather deposits $10,000 in a variable annuity account. The cost of one accumulation unit at that time is $200. When Heather begins to receive payments, the value of an accumulation unit is $225. What is the total value of the variable annuity?

(A) $10,000
(B) $11,250
(C) $12,250
(D) $22,500

Answer 2

(B) $11,250

Question 3

The value of one accumulation unit is found by:

(A) dividing the total value of the company’s VA fund by the total number of accumulation units
(B) dividing the VA account by the total number of policyowners
(C) dividing the surplus of the company by the number of accumulation units outstanding
(D) adding VA account amounts to the company surplus & dividing by the number of policyholders

Answer 3

(A) dividing the total value of the company’s VA fund by the total number of accumulation units

Question 4

Which of the following statements is(are) TRUE?

(A) The company cannot guarantee a specific interest yield from investments
(B) Investment results are usually geared to a portfolio of common stocks
(C) The value of accumulation units fluctuates
(D) All of the above statements are true

Answer 4

(D) All of the above statements are true

Question 5

Before VA benefits can be paid out, the accumulation units in a participant’s account must be converted to:

(A) investment units
(B) statistical units
(C) annuity units
(D) optional units

Answer 5

(C) annuity units

Question 6

After retirement starts, which of the following is TRUE?

(A) The number of annuity units stays the same
(B) The value of each annuity unit stays the same
(C) The dollar amount of monthly payments stays the same
(D) The vlaue is adjusted to accommodate cost-of-living changes

Answer 6

(A) The number of annuity units stays the same

Question 7

Insurers selling variable annuities are subject to:

(A) state regulation
(B) Federal Trade Commission regulation
(C) bank examiners’ scrutiny
(D) municipal regulation

Answer 7

(A) state regulation

Question 8

Which of the following statements is(are) TRUE?

(A) Insurers selling VA are subject to regulation by the state Office of Insurance Regulation
(B) The annuity itself is regulated as a security
(C) The common stocks backing VA accounts fall under the purview of the Securities and Exchange Commission
(D) All of the above statements are true

Answer 8

(D) All of the above statements are true

Question 9

A fixed dollar annuity guarantees:

(A) a fixed minimum dollar amount per payment
(B) the principal amount
(C) the minimum interest rate
(D) all of the above

Answer 9

(D) all of the above

Question 10

Common stocks are used int he investment portfolio underlying variable annuities because common stocks:

(A) usually provide a hedge against inflation
(B) guarantee a minimum interest rate
(C) are based on the full faith and credit of the insurer
(D) are insured by the federal government

Answer 10

(A) usually provide a hedge against inflation

Question 11

Are investments gains in the accumulation unit values subject to current income taxation?

(A) Yes, but only to the extent of the gain
(B) No, they are not currently taxable
(C) Yes, but the gain is paid by the company
(D) Yes, but the gain can be offset by any losses

Answer 11

(B) No, they are not currently taxable

Question 12

Florida law required insurers to distribute to each policyowner an annual report that contains which of the following?

(A) Dollar value of each unit
(B) Anticipated increase in number of units by the next anniversary
(C) Forecast of the value of the unit by the next anniversary
(D) Amount of tax on each unit reported to the IRS

Answer 12

(A) Dollar value of each unit

Question 13

The first page of an application for an annuity contract must display:

(A) the insurer’s name and state of domicile
(B) the insurer’s name and the agent’s name
(C) the agent’s name and license number
(D) the insurer’s name, the agent’s name, and the agent’s license number

Answer 13

(D) the insurer’s name, the agent’s name, and the agent’s license number

Question 14

During the accumulation period of a deferred variable annuity, the value of the individual account rises or falls based on:

(A) the variable premiums
(B) the number of annuitants
(C) the investment results
(D) the company expenses

Answer 14

(C) the investment results

Question 15

Before selling a variable annuity, the agent must furnish the prospect with:

(A) an outline of coverage
(B) a prospectus
(C) a consumer’s buying guide
(D) a table of guaranteed values

Answer 15

(B) a prospectus

Question 16

An application for a variable annuity contract must show which of the following on the first page?

(A) Agent’s name
(B) Agent’s license identification number
(C) Name of the insurer
(D) All of the above

Answer 16

(D) All of the above

Question 17

A variable annuity agent must notify the Department of Financial Services within 60 days of any of the following changes EXCEPT:

(A) change of the agent’s name
(B) change of the agent’s company
(C) change of the agent’s residence address
(D) change of the agent’s mailing address

Answer 17

(B) change of the agent’s company