NAIC390 UPDATED Actual Questions and CORRECT Answers
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Course
NAIC390
Institution
NAIC390
NAIC390 UPDATED Actual Questions and
CORRECT Answers
Regarding indexed annuities, the participation rate is best described as: - CORRECT
ANSWER- The percentage of increase in the index that will be used to calculate the
index-linked interest rate.
NAIC390 UPDATED Actual Questions and
CORRECT Answers
Regarding indexed annuities, the participation rate is best described as: - CORRECT
ANSWER- ✔✔The percentage of increase in the index that will be used to calculate the
index-linked interest rate.
Mortality and expense risk charges are designed to offset the insurer's risk that the annuitant
will outlive his or her - CORRECT ANSWER- ✔✔Life expectancy.
By creating a shared-risk pool, a fixed annuity evens out the ______ of the participants. -
CORRECT ANSWER- ✔✔Mortality risk.
Kate chooses a payment option that will guarantee payments for her lifetime but with an
additional guarantee that payments will be made for at least 10 years should she die before
then. This is referred to as a(n) ___________ payout. - CORRECT ANSWER- ✔✔Life with
period-certain.
Variable annuities offer investment options through a variety of ___________ that have a
range of investment objectives to match consumer's risk tolerances, time horizons, and goals.
- CORRECT ANSWER- ✔✔Variable subaccounts.
With this type of variable annuity living-benefit guarantee, the insurer promises a fixed
lifetime payment calculated a hypothetical benefit base even if the contract performs poorly. -
CORRECT ANSWER- ✔✔Guaranteed minimum income benefit.
If an annuitant surrenders his or her contract before reaching age 59 1/2, a ____________
premature-distribution tax penalty will apply. - CORRECT ANSWER- ✔✔10%
Tax advantages of annuities include __________. - CORRECT ANSWER- ✔✔Tax-deferred
accumulations.
Starting in the 1970s, issuers began offering _________ insurance products that offered the
potential for greater returns through the inclusion of an investment component. - CORRECT
ANSWER- ✔✔Universal life.
, In reference to indexed annuities, the terms annual reset, high-water mark, low-water mark,
and point-to-point refer to ____________. - CORRECT ANSWER- ✔✔Index methods.
The person designated to receive the death benefit of an annuity is the _______. - CORRECT
ANSWER- ✔✔If you don't know this, shame on you. Beneficiary.
Brandon owns mutual funds in his IRA and is considering buying a variable annuity. His
agent explains that the "_____________" of the variable subaccounts are equivalent to the
"shares of a mutual fund. - CORRECT ANSWER- ✔✔Accumulation units.
Marcy selects a payment option on her annuity that provides for payments to continue for her
lifetime, regardless of how long or short that may be. This is referred to as a ____________
payout. - CORRECT ANSWER- ✔✔Straight life.
Under some crisis situation, an annuity contract may waive surrender charges. Which of the
following would NOT qualify for a crisis waiver? - CORRECT ANSWER- ✔✔Financial
hardship.
John has paid monthly annuity premiums for 20 years. He has now retired and has begun
taking payments from the annuity. John has just ______________ the annuity. - CORRECT
ANSWER- ✔✔Annuitized.
Benefits of older annuities that may be lost in a non-Section 1035 exchange include all of the
following EXCEPT ___________. - CORRECT ANSWER- ✔✔LIFO income-tax treatment
of withdrawals.
The payout phase of an annuity is also called the _______ phase. - CORRECT ANSWER-
✔✔Annuitization.
Indexed annuities, like other annuities, are ________. - CORRECT ANSWER- ✔✔Insurance
contracts.
The GMAB is the guaranteed minimum amount received by the annuitant after the
accumulation period or some other specified period, which is either the amount invested or
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