Florida Agent's Health and Life (including
Annuities & Variable Contracts) Chapter 2
2026-2027 Questions and Correct Answers
Rated A+
A Straight Life policy has what type of premium?
A A variable annual premium for the life of the insured
B A level annual premium for the life of the insured
C An increasing annual premium for the life of the insured
D A decreasing annual premium for the life of the insured
- ANSWER-B A level annual premium for the life of the insured
Straight Life policies charge a level annual premium for the lifetime of
the insured and provide a level, guaranteed death benefit.
Your client wants both protection and savings from the insurance, and is
willing to pay premiums until retirement at age 65. What would be the
right policy for this client?
A Interest-sensitive whole life
B Life annuity with period certain
C Increasing term
D Limited pay whole life - ANSWER-D Limited pay whole life
Premium payments will cease at her age 65, but coverage will continue
to her death or age 100.
The equity in an equity index annuity is linked to
A The annuitant's individual stock portfolio.
B The insurance company's general account investments.
C An index like Standard & Poor's 500.
,D The returns from the insurance company's separate account. -
ANSWER-C An index like Standard & Poor's 500.
Equity indexed annuities are not securities, but they invest on a
relatively aggressive basis to aim for higher returns. Like a fixed
annuity, the equity indexed annuity has a guaranteed minimum interest
rate. The current interest rate that is actually credited is often tied to a
familiar index like the Standard and Poor's 500.
What is the purpose of establishing the target premium for a universal
life policy?
A To cover all policy expenses
B To keep the policy in force
C To accumulate cash value faster
D To pay up the policy faster - ANSWER-B To keep the policy in force
The target premium is a recommended amount that should be paid on a
policy in order to cover the cost of insurance protection and to keep the
policy in force throughout its lifetime.
Which of the following is NOT true regarding Equity Indexed
Annuities?
A They have guaranteed minimum interest rates.
B They are less risky than variable annuities.
C They earn lower interest rates than fixed annuities.
D The insurance company keeps a percentage of the returns. -
ANSWER-C They earn lower interest rates than fixed annuities.
Equity Indexed Annuities invest on an aggressive basis in order to yield
higher returns. Like a fixed annuity, Equity Indexed Annuities have
guaranteed minimum interest rates. The insurance company often keeps
a predetermined percentage of the return and pays the rest to the annuity
owner. Equity Indexed Annuities are less risky than variable annuities
and earn higher interest rates than fixed annuities.
,Which of the following types of policies will provide permanent
protection?
A Term life
B Group life
C Whole life
D Credit life - ANSWER-C Whole life
Whole life policies are referred to as permanent protection, since as long
as the premium is paid coverage will continue for the life of the insured.
Both the premiums and death benefit are guaranteed and will remain
level for life.
The main difference between immediate and deferred annuities is
A The number of insureds.
B The amount of each payment.
C When the income payments begin.
D How the annuity is purchased. - ANSWER-C When the income
payments begin.
The main difference between immediate and deferred annuities is when
the income payments begin. Immediate annuities will begin payments
within the first year, while deferred annuities will not begin payments
until sometime after the first year.
Which of the following is INCORRECT regarding a $100,000 20-year
level term policy?
A If the insured dies before the policy expired, the beneficiary will
receive $100,000.
B The policy will expire at the end of the 20-year period.
C At the end of 20 years, the policy's cash value will equal $100,000.
D The policy premiums will remain level for 20 years. - ANSWER-C At
the end of 20 years, the policy's cash value will equal $100,000.
Term policies do not develop cash values. All the other statements are
true.
, Which of the following is called a "second-to-die" policy?
A Juvenile life
B Joint life
C Survivorship life
D Family income - ANSWER-C Survivorship life
Survivorship life (also referred to as "second-to-die" or "last survivor"
policy) is much the same as joint life in that it insures two or more lives
for a premium that is based on a joint age.
Which two terms are associated directly with the way an annuity is
funded?
A Renewable or convertible
B Single payment or periodic payments
C Increasing or decreasing
D Immediate or deferred - ANSWER-B Single payment or periodic
payments
Annuities are characterized by how they can be paid for: either a single
payment (lump sum) or through periodic payments in which the
premiums are paid in installments over a period of time. Periodic
payment annuities can be either level, in which the annuitant/owner pays
a fixed installment, or the payments can be flexible, in which the amount
and frequency of each installment varies.
A Universal Life Insurance policy is best described as a/an
A Variable Life with a cash value account.
B Whole Life policy with two premiums: target and minimum.
C Flexible Premium Variable Life policy.
D Annually Renewable Term policy with a cash value account. -
ANSWER-D Annually Renewable Term policy with a cash value
account.
Annuities & Variable Contracts) Chapter 2
2026-2027 Questions and Correct Answers
Rated A+
A Straight Life policy has what type of premium?
A A variable annual premium for the life of the insured
B A level annual premium for the life of the insured
C An increasing annual premium for the life of the insured
D A decreasing annual premium for the life of the insured
- ANSWER-B A level annual premium for the life of the insured
Straight Life policies charge a level annual premium for the lifetime of
the insured and provide a level, guaranteed death benefit.
Your client wants both protection and savings from the insurance, and is
willing to pay premiums until retirement at age 65. What would be the
right policy for this client?
A Interest-sensitive whole life
B Life annuity with period certain
C Increasing term
D Limited pay whole life - ANSWER-D Limited pay whole life
Premium payments will cease at her age 65, but coverage will continue
to her death or age 100.
The equity in an equity index annuity is linked to
A The annuitant's individual stock portfolio.
B The insurance company's general account investments.
C An index like Standard & Poor's 500.
,D The returns from the insurance company's separate account. -
ANSWER-C An index like Standard & Poor's 500.
Equity indexed annuities are not securities, but they invest on a
relatively aggressive basis to aim for higher returns. Like a fixed
annuity, the equity indexed annuity has a guaranteed minimum interest
rate. The current interest rate that is actually credited is often tied to a
familiar index like the Standard and Poor's 500.
What is the purpose of establishing the target premium for a universal
life policy?
A To cover all policy expenses
B To keep the policy in force
C To accumulate cash value faster
D To pay up the policy faster - ANSWER-B To keep the policy in force
The target premium is a recommended amount that should be paid on a
policy in order to cover the cost of insurance protection and to keep the
policy in force throughout its lifetime.
Which of the following is NOT true regarding Equity Indexed
Annuities?
A They have guaranteed minimum interest rates.
B They are less risky than variable annuities.
C They earn lower interest rates than fixed annuities.
D The insurance company keeps a percentage of the returns. -
ANSWER-C They earn lower interest rates than fixed annuities.
Equity Indexed Annuities invest on an aggressive basis in order to yield
higher returns. Like a fixed annuity, Equity Indexed Annuities have
guaranteed minimum interest rates. The insurance company often keeps
a predetermined percentage of the return and pays the rest to the annuity
owner. Equity Indexed Annuities are less risky than variable annuities
and earn higher interest rates than fixed annuities.
,Which of the following types of policies will provide permanent
protection?
A Term life
B Group life
C Whole life
D Credit life - ANSWER-C Whole life
Whole life policies are referred to as permanent protection, since as long
as the premium is paid coverage will continue for the life of the insured.
Both the premiums and death benefit are guaranteed and will remain
level for life.
The main difference between immediate and deferred annuities is
A The number of insureds.
B The amount of each payment.
C When the income payments begin.
D How the annuity is purchased. - ANSWER-C When the income
payments begin.
The main difference between immediate and deferred annuities is when
the income payments begin. Immediate annuities will begin payments
within the first year, while deferred annuities will not begin payments
until sometime after the first year.
Which of the following is INCORRECT regarding a $100,000 20-year
level term policy?
A If the insured dies before the policy expired, the beneficiary will
receive $100,000.
B The policy will expire at the end of the 20-year period.
C At the end of 20 years, the policy's cash value will equal $100,000.
D The policy premiums will remain level for 20 years. - ANSWER-C At
the end of 20 years, the policy's cash value will equal $100,000.
Term policies do not develop cash values. All the other statements are
true.
, Which of the following is called a "second-to-die" policy?
A Juvenile life
B Joint life
C Survivorship life
D Family income - ANSWER-C Survivorship life
Survivorship life (also referred to as "second-to-die" or "last survivor"
policy) is much the same as joint life in that it insures two or more lives
for a premium that is based on a joint age.
Which two terms are associated directly with the way an annuity is
funded?
A Renewable or convertible
B Single payment or periodic payments
C Increasing or decreasing
D Immediate or deferred - ANSWER-B Single payment or periodic
payments
Annuities are characterized by how they can be paid for: either a single
payment (lump sum) or through periodic payments in which the
premiums are paid in installments over a period of time. Periodic
payment annuities can be either level, in which the annuitant/owner pays
a fixed installment, or the payments can be flexible, in which the amount
and frequency of each installment varies.
A Universal Life Insurance policy is best described as a/an
A Variable Life with a cash value account.
B Whole Life policy with two premiums: target and minimum.
C Flexible Premium Variable Life policy.
D Annually Renewable Term policy with a cash value account. -
ANSWER-D Annually Renewable Term policy with a cash value
account.
