2-15 exam (Annuity)

A variable annuity insurer is required by Florida law to inquire whether an applicant for a variable annuity will also have any form of fixed dollar retirement income.

TRUE

Fraternals write the same types of life insurance contracts as are written by ordinary or industrial life insurance companies.

TRUE

The use of genetic information or test results by health insurers or HMOs is prohibited by Florida law.

TRUE

An annuitant has a Life with 10-year Period Certain annuity option and dies before ten years has elapsed. What happens to the remaining funds?

They are paid to the beneficiary for the rest of the certain period.

Agents must secure ____________________ prior to the use of any advertisement not furnished by the insurer.

company approval

Variable products general accounts are composed of _____________ constructed to match the liabilities and guarantees of the contracts they back.

conservative investments

Representing to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required is an example of:

sliding.

The _________________ annuity option pays the annuitant a guaranteed income for his or her lifetime. If the annuitant dies before the entire proceeds are paid out, the remainder of the principal is basically forfeited.

straight life income

If life insurance policy replacement takes place on the basis of incorrect or incomplete representations, it is known as:

twisting.

The data on the annual report provided to annuity owners which states the units credited to the contract and the dollar value of a unit must be updated no more than ____________ prior to the date the report is mailed

two months

The survivorship annuity:

uses the proceeds of a life insurance policy to purchase a single premium annuity for the survivor of the insured.

The type of annuity in which the values grow according to performance of the investment medium and in which the benefit may fluctuate according to market performance is called a:

variable annuity.

Guaranteed income for the annuitant's lifetime; or if the annuitant dies before funds are depleted, the policy beneficiary receives a lump sum cash payment. What annuity payout option is described?

Cash Refund Option

Which annuity structure allows immediate payments or payments that can be deferred until a future date?

Date Annuity Benefit Payments Begin

Which annuity structure provides a single lump sum payment or periodic payments over time?

Funding Method

The maximum allowable contribution per child in a Coverdell Education Savings Account is:

$2,000.

"Economically dead" means:

physically disabled, but not physically deceased.

Social Security disability benefits are eligible to begin after a waiting period of ________ through which time the person must remain disabled.

5 months

An agent is required to maintain records relating to senior annuity investment transactions for _____ years.

five

Accumulation units will always convert to annuity units at the same value because they are calculated from the same separate account's total value.

FALSE

Variable annuities are products for the exclusive sale of life insurance companies.

FALSE

the payment of the proceeds of a policy in other than a lump sum cash payment is called a:

settlement option.

A producer's primary responsibility in the application process is to the:

insurer.

The exclusion ratio is always considered ______% in variable annuities.

100

With an immediate annuity, payments to the annuitant begin when a period of time has elapsed, which is:

any period of time before one year.

Variable annuities use which of the following at time of retirement to determine the amount of benefits?

Annuity units

____________ is/are the basic measure and method by which the purchaser's annuity income is determined.

Annuity units

The Florida Insurance Code provides that the ______________ may adopt reasonable rules necessary to effect any of their respective statutory duties.

Department of Financial Services and the Office of Insurance Regulation

Which of the following is responsible for the regulation of retirement plans in Florida?

ERISA

Which of the following factors determines whether policy dividends will be paid on a participating policy?

Expenses and claims costs

If Mr. Dee purchased an annuity with a single premium which will pay him a lifetime monthly income commencing within one year, what type of annuity did he purchase?

Immediate annuity

IRAs were established to provide savings incentives and tax breaks to whom?

Individuals

Which of the following is a TRUE statement about an annuity?

It liquidates both principal and interest during the annuity period.

Which of the following annuity payout options provide guaranteed payments for a certain period of time; and if the annuitant dies before the period has expired, the policy pays the beneficiary through the remainder of the period.

Period Certain Option

Which of the following is also referred to as a "contingent" beneficiary?

Secondary beneficiary

When an annuitant dies and there is no refund of premiums paid, this form of annuity is which type?

Straight Life Income annuity

Which organization regulates the separate account in a variable annuity?

The SEC

An annuity is designed to provide which of the following financial features?

The liquidation of principal and interest and a favorable tax treatment for income received.

____________ annuities use annuity units at time of retirement to determine the amount of benefits.

Variable

If a person 60 years of age inherits a sum of money and desires to purchase an annuity that will appreciate with market and economic conditions, which would be the best annuity to consider?

Variable annuity

What term refers to the employee's rights to benefits or contributions accrued on behalf of the employee in a pension plan?

Vesting

Are variable life insurance and variable universal life insurance subject to the same type of dual regulation as variable annuities?

YES

In _____________, employee compensation is deferred to some future age or date.

a Section 457 plan

With an immediate annuity, payments to the annuitant begin when a certain period of time has elapsed. That time period is:

any period of time before one year; typically one month from the purchase date.

When two persons receive benefits from an annuity and one continues to receive benefits after the first annuitant dies, it is a ______________ annuity.

Joint and Full Survivor

Mr. & Mrs. Browning were both receiving annuity payments. Mr. Browning died but Mrs. Browning continues to receive payments. The Brownings have a

Joint and Survivor annuity.

Mr. & Mrs. Browning were both receiving annuity payments. Mr. Browning died but Mrs. Browning continues to receive payments. The Brownings have a:

Joint and Survivor annuity.

____________ are designed to fund retirement of self-employed individuals.

Keogh plans

If interest rates rise during the annuity period, what happens to the payout on a fixed annuity?

The payout stays the same.

The basis for many state statutes regulating insurance advertising is the NAIC's:

Unfair Trade Practices Act.

If the funds are not used for their intended purpose in the Coverdell Education Savings Account, they are taxed as the recipient's income and subject to a _______ penalty.

10%

While the variable annuity company will not guarantee the value of the underlying separate accounts, it will always guarantee a minimum interest rate to assure some growth.

FALSE

Which of the following settlement options specifies payment of a stated monthly amount until the principal and interest are exhausted?

Fixed Amount

The ______________________ gives the Chief Financial Officer power to regulate financial planners.

Florida Insurance Code

Individual retirement accounts are available to _________________ participants.

Keogh, TSA, and corporate retirement plan

Ken wants his wife, Barbie, to receive annuity payments for life. If Barbie dies before 10 years have passed, Barbie's beneficiary will continue to receive the payments until the end of the 10-year period. Ken's choice is the __________ option

Life Income with Period Certain

Guaranteed income for the annuitant's lifetime; and if the annuitant dies before the period certain has expired, the policy pays the beneficiary in periodic installments until the end of the designated period. What annuity payout option is described?

Life With Period Certain

Can a person be licensed only as a variable annuity agent?

NO

An individual who is employed at a firm with no pension plan can establish which of the following as an individual?

Neither a Keogh plan nor a TSA

Under Florida law, coverage for ________________ is mandatory on every health policy offered to employees.

None of these benefits are considered mandatory to be offered to employees (mental and nervous disorders, maternity expenses, or alcohol and drug rehabilitation).

The index-linked interest is based on the difference between the index value at the end of the term and the index value at the start of the term. Interest is added to the annuity at the end of the term. What is the indexing method used?

Point-to-Point

Index-linked interest is determined annually by comparing the index value at the end of the contract year with the index value at the start of the contract year. Interest is added to the annuity annually during the term. What is the indexing method used?

Ratcheting

A paid-up deferred variable life annuity is a nonforfeiture option available to variable annuity policyowners who discontinue premium payments.

TRUE

An annuitant received monthly payments from a variable annuity under a Joint and Two-Thirds Survivor option. If the primary annuitant dies, what will the surviving annuitant receive?

Two-thirds of the annuity units accumulated by the annuitant

Equity indexed annuities are a form of _______________ annuities

fixed

An annual premium at 3% reserve interest assumption will be _________ than at a 3 1/2% reserve interest assumption.

greater

The purpose behind full disclosure requirements is to:

help a client make an informed decision.

The basic risk insured against by a life insurance company annuity contract, including a variable annuity, is the risk of:

living too long.

The cash surrender value of life insurance policies and annuities are not subject to garnishment, attachment or legal process in favor of a creditor unless:

the policy was specifically taken out for the benefit of the creditor.

In 2011, agent Harry moved his office. He wants to dispose of as much unnecessary files as possible. He is permitted to dispose of any records involving premium payments prior to

2008.

Two elderly sisters wish to invest their inheritance in a way that will provide them both with lifetime incomes. Which one of the following annuities would provide them with the specific benefit they desire?

Joint and Full Survivor

Which of the following covers full income for the lifetime of two annuitants

A Joint & Full Survivor annuity

Which of the following covers full income for the lifetime of two annuitants?

A Joint & Full Survivor annuity

Which of the following statements best pertain to a deferred annuity?

A deferred annuity may be purchased by a single premium or by installments.

Which of the following statements best pertain to a deferred annuity?

A deferred annuity may be purchased by a single premium or through installments.

Which of the following statements best describes the funding of a deferred annuity?

A deferred annuity may be purchased by either a single premium or through installments.

Midge begins receiving monthly annuity checks after her husband's death. A year later, Midge passes away and their daughter receives the same amount in monthly checks until the proceeds are exhausted. Which of the following options provide for this?

Installment Refund option

Which of the following annuities insures full income for the lifetime of two annuitants?

Joint & Full Survivor Life annuity

Joan is 44 years old and decides to start receiving payments from her annuity. How can she avoid paying surrender charges for early withdrawal?

By withdrawing no more than 10% of the initial premium investment each year

Both Mr. & Mrs. Foren were receiving annuity payments until Mr. Foren died. Mrs. Foren continues to receive payments, however. Which type of annuity policy payout option did the Foren's choose?

Joint Life and Survivor option

Which of the following specifically identifies an annuity option that deals with a number of individuals who may receive benefits?

Cash Refund annuity option

Keogh plans are similar to what other type of retirement plan?

Corporate Pension plans

Index-linked interest is evaluated at various points during the term and based on the difference between the highest index value and the index value at the start of the term. Interest is added to the annuity at the end of the term. What method is used?

High-Water Mark

Guaranteed income for the annuitant's lifetime; or if the annuitant dies before funds are depleted, the policy pays the beneficiary in periodic installments. What annuity payout option is described?

Installment Refund Option

If George predeceases his wife, Sara, he wants her to receive the balance of the principal due on his annuity. George should choose the ___________________ option.

Joint and Full Survivor

The principal use of an annuity is to:

arrange systematic income.

An agent engaged in churning is guilty of a _______________ if he or she is proven to have exhibited fraudulent conduct.

first degree misdemeanor

An agent is required to maintain records relating to senior annuity investment transactions for _____ years

five