Chapter 2

b. the insurer's general account

What are fixed annuity premium deposits invested in? a. the insurer's separate account b. the insurer's general account c. a stock market index d. the state's insurance guaranty fund

d. Variable annuity principal and earnings are not guaranteed by the insurer.

Which of the following is a distinguishing feature between fixed and variable annuities? a. Fixed annuities can only be funded with the payment of a single premium. b. Only variable annuities provide for annuitization. c. Fixed annuities allow owners to direct their premium payments into stock and bond accounts. d. Variable annuity principal and earnings are not guaranteed by the insurer.

an indexed deferred annuity

Felipe owns an annuity that credits a rate of interest that is based on annual percentage changes in the S&P 500. If the index change is positive, the insurer will credit 90 percent of the percentage change to his contract for that year; if the index change is negative, the insurer will credit zero percent to the contract for that year. What kind of annuity does Felipe own? a. a traditional fixed deferred annuity b. an indexed deferred annuity c. a variable deferred annuity d. an immediate fixed annuity

c. accumulation units

What are premium deposits in a variable annuity's subaccounts applied to purchase? a. shares b. annuity units c. accumulation units d. rights

b. 50

When Geneva purchased her variable annuity, she directed $500 of her initial premium into the product's Subaccount A. The unit value at the time of her purchase was $10. How many Subaccount A units did Geneva acquire? a. 5 b. 50 c. 500 d. 5,000

b. when the contract is the funding vehicle for a qualified plan

When are annuity owners limited as to the amount of premium they can contribute to their contracts? a. when any portion of the premiums is allocated to the insurer's separate account b. when the contract is the funding vehicle for a qualified plan c. when the owner is also the annuitant d. at no time, because annuities never impose limits on contributions