UNIT 28

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

(c) investment results

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

Common stocks are used in the investment portfolio underlying variable annuities because common stocks

(a) usually provide a hedge against inflation

5. A variable annuity agent must notify the Department of Financial Services within 30 days of any of the following changes EXCEPT

(b) change of the agent's company Change of company is done by the insurance company doing an appointment and/or cancelling an appointment. Change of name, address, contact phone numbers, or e-mail address must be reported. Reference: State Study Manual, Unit 28, "Marketing Practices and Suitability" - "Must an agent report any changes in residence to the DFS? (Note, deadline is 30 days, not 60 days,

17. Before selling a variable annuity, the agent must furnish the prospect with a(n)

(b) prospectus Before the sale of any variable product, a prospectus must be delivered.

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

(c) Immediate Basic types are immediate or deferred

Which of the following statements is true? (a) Insurers selling VA are subject to state Insurance Department 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

(d) All of the above statements are true

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

(a) Dollar value of each unit

16. 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

(d) all of the above

6. Insurers selling variable annuities are subject to

state regulation

3. After retirement starts, which of the following is TRUE?

(a) The number of annuity units stays the same

7. A fixed dollar annuity guarantees

(a) a fixed minimum dollar amount per payment

The period of time from a variable annuity contract's issue date until the start of payments is known as the

(a) deductible period Until the policy is annuitized, it is in the accumulation period (pay in period

15. Which of the following statements is true regarding variable annuities? (a) The company cannot guarantee an 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.

(d) All of the above statements are true

5. Which of the following statements is true regarding variable annuities? (a) The company cannot guarantee an 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.

(d) All of the above statements are true

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

(d) The insurer's name, the agent's name, and the agent's license number

8. Which of the following statements is true regarding variable annuities? (a) The company cannot guarantee an 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

(d) All of the above statements are true.

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

D ALL

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?

(b) $11,250 $10,000 / $200 (Cost) = 50 units. 50 units x $225 (new value) = $11,250.

7. 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?

(b) $11,250 -$10,000 / $200 (Cost) = 50 units. 50 units x $225 (new value) = $11,250. Reference: State Study Manual, Unit 11, "Annuity Payout Options" - "Accumulation Units" and Unit 28, "Accumulation Units"

6. Are investment gains in the accumulation unit values subject to current income taxation?

(b) No, they are not currently taxable No taxes are payable during the accumulation period.

11. The period of time from a variable annuity contract's issue date until the start of payments is known as the

(b) accumulation period Until the policy is annuitized, it is in the accumulation period (pay in period).

The period of time from a variable annuity contract's issue date until the start of payments is known as the

(b) accumulation period Until the policy is annuitized, it is in the accumulation period (pay in period).

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

(c) Immediate Basic types are immediate or deferred.

4. Before VA benefits can be paid out, the accumulation units in a participant's account must be converted to

(c) annuity units

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

(c) annuity units Once converted, the number of annuity units will never change.