LOMA 280 CHAPTER 10 EXAM
QUESTIONS WITH ALL CORRECT
ANSWERS GRADED A+
guaranteed minimum accumulation benefit (GMIB) - Answer-A variable annuity con-
tract feature which guarantees that the accumulated value will be at least a min-imum
amount if the contract remains in force for a specified period of time— typically 7 to 10
years.
guaranteed minimum death benefit (GMDB) - Answer-A variable annuity contract fea-
ture which guarantees that, if the annuitant dies before periodic income pay-ments
begin, the beneficiary will receive at least a stated amount, regardless of the contract's
accumulated value at that time.
guaranteed minimum income benefit (GMIB) - Answer-A variable annuity contract fea-
ture that guarantees a minimum periodic income payment regardless of the annuity's
investment performance if the contract remains in force for a speci-fied period of time—
typically 7 to 10 years.
guaranteed minimum withdrawal benefit (GMWB) - Answer-A variable annuity con-tract
feature which guarantees that up to a certain percentage of the amount paid into the
contract will be available for withdrawals annually during the accumulation period, even
if subaccount investments perform poorly.
immediate annuity - Answer-An annuity that provides periodic income payments that
gen-erally are scheduled to begin one annuity period after the date the contract is
issued.
incontestability provision - Answer-An insurance and annuity policy provision that
describes the time limit within which the insurer has the right to avoid the con-tract on
the ground of material misrepresentation in the application.
individual retirement annuity - Answer-An individual deferred annuity that qualifies for
favorable federal income tax treatment because it meets the requirements speci-fied in
the federal tax laws for individual retirement arrangements.
individual retirement arrangement (IRA) - Answer-A tax-deferred savings arrangement
that an individual establishes and that meets certain requirements specified in the U.S.
federal tax laws.
, investment management fee - Answer-A fee charged the owner of a variable annuity
which covers the costs of managing and operating the investment funds underlying the
variable subaccounts.
joint and survivor life annuity - Answer-A life annuity that provides periodic income pay-
ments to two or more annuitants, and those payments continue until both or all of the
annuitants die
life annuity with period certain - Answer-A life annuity which guarantees that the insurer
will make periodic income payments throughout the annuitant's life and guar-antees that
the payments will be made for at least a certain period, even if the annuitant dies before
the end of that period
life with refund annuity - Answer-A life annuity that provides periodic income payments
throughout the lifetime of the annuitant and guarantees that at least the purchase price
of the annuity will be paid out
lump-sum distribution - Answer-The distribution of the accumulated value of an annuity
in a single payment.
market value adjusted (MVA) annuity - Answer-An annuity that offers multiple guar-
antee periods and multiple fixed interest rates.
maturity date - Answer-The date on which the insurer begins to make the periodic
income payments under an annu-ity contract.
misstatement of age or sex provision - Answer-A life insurance or annuity policy provi-
sion that describes the action the insurer will take to adjust the amount of the policy
benefit in the event that the age or sex of the insured is incorrectly stated
mortality and expense risk (M&E) charge - Answer-A fee charged the owner of a vari-
able annuity which covers various risks and expenses assumed by the insurer, including
the risk involved in providing the annuity death benefit and certain other guarantees.
payee - Answer-The person or entity who receives the periodic income pay-ments
according to the terms of an annuity contract
payout annuity - Answer-An annuity in the payout period
payout option - Answer-The choices an annuity contract owner has as to how the
insurer will distribute the funds in an annuity during the payout period.
payout options provision - Answer-An annuity contract provision that lists and describes
each of the payout options from which the contract owner may select
QUESTIONS WITH ALL CORRECT
ANSWERS GRADED A+
guaranteed minimum accumulation benefit (GMIB) - Answer-A variable annuity con-
tract feature which guarantees that the accumulated value will be at least a min-imum
amount if the contract remains in force for a specified period of time— typically 7 to 10
years.
guaranteed minimum death benefit (GMDB) - Answer-A variable annuity contract fea-
ture which guarantees that, if the annuitant dies before periodic income pay-ments
begin, the beneficiary will receive at least a stated amount, regardless of the contract's
accumulated value at that time.
guaranteed minimum income benefit (GMIB) - Answer-A variable annuity contract fea-
ture that guarantees a minimum periodic income payment regardless of the annuity's
investment performance if the contract remains in force for a speci-fied period of time—
typically 7 to 10 years.
guaranteed minimum withdrawal benefit (GMWB) - Answer-A variable annuity con-tract
feature which guarantees that up to a certain percentage of the amount paid into the
contract will be available for withdrawals annually during the accumulation period, even
if subaccount investments perform poorly.
immediate annuity - Answer-An annuity that provides periodic income payments that
gen-erally are scheduled to begin one annuity period after the date the contract is
issued.
incontestability provision - Answer-An insurance and annuity policy provision that
describes the time limit within which the insurer has the right to avoid the con-tract on
the ground of material misrepresentation in the application.
individual retirement annuity - Answer-An individual deferred annuity that qualifies for
favorable federal income tax treatment because it meets the requirements speci-fied in
the federal tax laws for individual retirement arrangements.
individual retirement arrangement (IRA) - Answer-A tax-deferred savings arrangement
that an individual establishes and that meets certain requirements specified in the U.S.
federal tax laws.
, investment management fee - Answer-A fee charged the owner of a variable annuity
which covers the costs of managing and operating the investment funds underlying the
variable subaccounts.
joint and survivor life annuity - Answer-A life annuity that provides periodic income pay-
ments to two or more annuitants, and those payments continue until both or all of the
annuitants die
life annuity with period certain - Answer-A life annuity which guarantees that the insurer
will make periodic income payments throughout the annuitant's life and guar-antees that
the payments will be made for at least a certain period, even if the annuitant dies before
the end of that period
life with refund annuity - Answer-A life annuity that provides periodic income payments
throughout the lifetime of the annuitant and guarantees that at least the purchase price
of the annuity will be paid out
lump-sum distribution - Answer-The distribution of the accumulated value of an annuity
in a single payment.
market value adjusted (MVA) annuity - Answer-An annuity that offers multiple guar-
antee periods and multiple fixed interest rates.
maturity date - Answer-The date on which the insurer begins to make the periodic
income payments under an annu-ity contract.
misstatement of age or sex provision - Answer-A life insurance or annuity policy provi-
sion that describes the action the insurer will take to adjust the amount of the policy
benefit in the event that the age or sex of the insured is incorrectly stated
mortality and expense risk (M&E) charge - Answer-A fee charged the owner of a vari-
able annuity which covers various risks and expenses assumed by the insurer, including
the risk involved in providing the annuity death benefit and certain other guarantees.
payee - Answer-The person or entity who receives the periodic income pay-ments
according to the terms of an annuity contract
payout annuity - Answer-An annuity in the payout period
payout option - Answer-The choices an annuity contract owner has as to how the
insurer will distribute the funds in an annuity during the payout period.
payout options provision - Answer-An annuity contract provision that lists and describes
each of the payout options from which the contract owner may select
