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MICHIGAN VARIABLE AN NUITIES
EXAM FULLY SOLVED GR ADED
A+
Question: What is the accumulation phase?
Correct answer: the period during which contributions are
made to an annuity
Question: What is an accumulation unit?
Correct answer: an accounting measure, similar to a
mutual fund share,
System: used to determine an annuitant's proportionate
interest in the insurer's separate account during the accumulation phase of a variable annuity. Both the number and value of these units will change during the accumulation phase
Question: What is an administration charge?
Correct answer: under an insurance or annuity contract,
the charge the insurance company makes to compensate
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for maintaining records, accounting and reports generation
Question: Who is an annuitant?
Correct answer: a person who receives the distribution
from an annuity contract
Question: What is an annuity?
Correct answer: a contract in which the insurer agrees, for
a price, to make regular payments to an individual for life or some fixed period
Question: What is the annuity phase?
Correct answer: the period, after annuitization, during
which annuity payments are made to an annuitant
Question: What is an annuity unit?
Correct answer: An accounting measure used to
determine the amount of each payment during an annuity's distribution stage. The calculation takes into
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account the value of each accumulation unit and such other factors as assumed interest rate and mortality risk.
Question: What is the assumed interest rate (AIR)?
Correct answer: an assumption, built into variable annuity
contracts, of the minimum rate of return the insurer expects to receive and that forms the basis for an initial annuity payment as well as a "floor" from which to measure gain
Question: What is a combined ("balanced") annuity?
Correct answer: an annuity providing for payments that
derive from both fixed and variable annuity accounts
Question: What is the death benefit guarantee (VA)?
Correct answer: an amount equal to the higher of the
separate account balance or the sum of the purchase payments, which is paid to the beneficiary of a variable annuitant in the event of their death during the accumulation phase
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Question: What is a deferred annuity?
Correct answer: an annuity in which payments begin
more than one payment period (one month to one year) after the purchase date
Question: What is the direct method?
Correct answer: an approach to managing a variable
products separate account that utilizes an open ended investment company (similar to a mutual fund family) created inside the structure of an insurer
Question: What is diversification?
Correct answer: an investing technique characterized by
buying a variety of different investments the market risk is spread out and reduced
Question: What is dual licensure?
Correct answer: the requirement that a person who sells
variable life or variable annuities must be state licensed to sell life insurance, and also federally licensed as a
