Florida Agent's Health & Life (including Annuities & Variable Contracts) Chapter 2 Questions and Correct Answers Updated Version 2023 Good Luck A domestic insurer issuing variable contracts must establish one or more A Annuity accounts.B General accounts.C Separate accounts.D Liability accounts. - Correct AnswerC Separate accounts.
Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?A Variable annuity B Flexible payment annuity C Deferred interest annuity D Immediate annuity - Correct AnswerD Immediate annuity
An annuity purchased with a single lump-sum payment, with a 25-year fixed-period distribution will be most suitable for this arrangement.
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?A Immediate B Flexible C Deferred D Variable - Correct AnswerA Immediate
With an immediate annuity, distribution starts within 1 year of purchase.
A policy will pay the death benefit if the insured dies during the 20-year premium- paying period, and nothing if death occurs after the 20-year period. What type of policy is this?A Ordinary life policy B Limited pay whole life C Level term D Term to specified age - Correct AnswerC Level term
A 20-year term policy is written to provide a level death benefit for 20 years. 1 / 3
A Return of Premium term life policy is written as what type of term coverage?A Increasing B Decreasing C Renewable D Level - Correct AnswerA Increasing
Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.
A Straight Life policy has what type of premium?A A variable annual premium for the life of the insured B A level annual premium for the life of the insured C An increasing annual premium for the life of the insured D A decreasing annual premium for the life of the insured - Correct AnswerB A level annual premium for the life of the insured
Straight Life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit.
A Universal Life Insurance policy is best described as a/an A Variable Life with a cash value account.
B Whole Life policy with two premiums: target and minimum.
C Flexible Premium Variable Life policy.D Annually Renewable Term policy with a cash value account. - Correct AnswerD Annually Renewable Term policy with a cash value account.
A universal policy has two components: an insurance component and a cash account.The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.
All of the following are true about variable products EXCEPT A Policyowners bear the investment risk.B The premiums are invested in the insurer's general account.C The minimum death benefit is guaranteed.D The cash value is not guaranteed. - Correct AnswerB The premiums are invested in the insurer's general account.
Insurers selling variable products invest their customer's monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.
All of the following are true of an annuity owner EXCEPT A The owner is the party who may surrender the annuity.B The owner must be the party to receive benefits.C The owner pays the premiums on the annuity. 2 / 3
D The owner has the right to name the beneficiary. - Correct AnswerB The owner must be the party to receive benefits.
The "owner" is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity. The owner, however, does not have to be the one who receives the benefits; it could be the annuitant (if different from the owner) or the beneficiary.
All of the following are true regarding a decreasing term policy EXCEPT A The death benefit is $0 at the end of the policy term.B The contract pays only in the event of death during the term and there is no cash value.C The face amount steadily declines throughout the duration of the contract.D The payable premium amount steadily declines throughout the duration of the contract. - Correct AnswerD The payable premium amount steadily declines throughout the duration of the contract.
Premiums remain level with a decreasing term policy; only the face amount decreases.
All of the following entities regulate variable life policies EXCEPT A The Guaranty Association.B Federal government.C The SEC.D The Insurance Department. - Correct AnswerA The Guaranty Association.
Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.
All of the following statements about equity index annuities are correct EXCEPT A They invest on a more aggressive basis aiming for higher returns.B The annuitant receives a fixed amount of return.C They have a guaranteed minimum interest rate.D The interest rate is tied to an index such as the Standard & Poor's 500. - Correct AnswerB The annuitant receives a fixed amount of return.
Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.
All other factors being equal, the least expensive first-year premium payment is found in A Increasing Term.B Decreasing Term.C Level Term.D Annually Renewable Term. - Correct AnswerD Annually Renewable Term
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