NC Life Insurance Exam || Most Recent Exam 2026
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Fran has an annuity into which she is making monthly fixed
premium deposits of a specified amount and which she intends
to use to supplement her income when she retires in 15 years.
The annuity is credited with the higher of a current or
guaranteed rate of interest. What type of policy does Fran most
likely own? - ANSWER -fixed premium deferred annuity
Explain the surrender charges of an annuity - ANSWER -annuity
owners may pay a fee for withdrawing from the annuity in the
early years, Example would be a 7% charge during the 1st 3
years of contract a 6% charge in the 4th and 5th year and so on.
distributions from a deferred annuity are taxable right upfront. It
is taxable on the GAIN.There is also a 10% penalty tax on
withdraws before age 59 1/2/ Not good for short term use or for
seniors. - ANSWER -Taxation on the distribution of annuities
deferred annuities accumulate funds for the future distribution.
under what circumstances are these funds forfeitable to the
insurer? - ANSWER -under no circumstances- accumulated
funds un a deferred annuity always belong to the owner. they
,are not forfeitable, even if the owner stops making premium
payments.
Under which of the following are payments made for as long as
it takes to liquidate the annuity principal, with the contract
owner choosing a monthly amount, and the insurance company
computing how long it will take to liquidate the principal at the
selected amount? - ANSWER -fixed amount certain payout
option
The typical settlement options involving life contingencies
generally include all of the following; - ANSWER -life income
with period certain option
straight life income, or pure life income, option
life income with guaranteed refund option
Sam is planning to buy a deferred annuity. When will he select a
settlement option? - ANSWER -He can choose the settlement
option when the deferred contract annuitizes or when he buys
the annuity.
Grace's annuity pays her an income for her lifetime, regardless
of how long she lives. When she dies, no further payments are
made to anyone. Which of the following types of settlement
options does she have? - ANSWER -straight, or pure, life
income
Which of the following best describes the tax treatment of
FIXED annuity death benefit payments? - ANSWER -The
,beneficiary must pay taxes on any amount he or she receives
that exceeds the sum of the premiums paid into the contract.
Under which one of the following circumstances does a fixed
deferred annuity contract provide a death benefit? - ANSWER -if
the contract owner or annuitant dies during the accumulation
period
Explain a fixed annuity death benefit - ANSWER -it is the
amount contributed into the contract plus interest earned on
that, minus any withdraws or charges.
A 2-tiered fixed annuity will pay a higher level of interest than
the standard declared rate fixed annuity under which condition?
- ANSWER -only if the annuity owner annuitizes the contract
What is the typical minimum interest rate compounded annually
for a deferred annuity? - ANSWER -2-3%
- no guarantees, premiums are invested into insurers
subaccounts. value of contract will increase of decrease
depending on the investment results in the variable
subaccounts. - ANSWER -Variable Annuities
what is the growth of a variable annuity's account value during
its accumulation period measured in terms of? - ANSWER -
Accumulation Units
, What are the four steps to determining the payment amount for
a variable annuity? - ANSWER -1. Determine the assumed
interest rate (AIR)
2. Use the AIR to calculate the 1st annual payment amount.
3. Convert the 1st annuity payment amount into a set number of
annuity units
4. Determine future annuity payment amounts by multiplying
annuity units by the current NAV
rate of return that the contract's values are assumed to earn
over the annutization period. Owners usually select the rate,
typically 3-5% - ANSWER -Assumed Interest Rate (AIR)
The annuity that has a guaranteed minimum interest rate and
allows the annuitant to invest money in an index (i.e.: S&P 500).
The investments grow as the index grows. - ANSWER -Equity
Indexed Annuity
Provides a Death Benefit if the annuitant or contract owner dies
before the contract is annuitized. (like declared rate fixed and
variable annuities). Can only increase in value. - ANSWER -
Equity Indexed annuity Death Benefits
Unlike an EIA, this annuity offers an interest rate feature that
makes it possible for the contract value to LOSE money if the
contact is surrendered before the end of its term. a fixed
annuity which shifts some of the investment risk to contract
holder. - ANSWER -Market Value Adjusted Annuity
-2027Actual Complete Real Exam Questions And
Correct Answers (Verified Answers) Already Graded |
Guaranteed Success!! Newest Exam | Just Released!!
Fran has an annuity into which she is making monthly fixed
premium deposits of a specified amount and which she intends
to use to supplement her income when she retires in 15 years.
The annuity is credited with the higher of a current or
guaranteed rate of interest. What type of policy does Fran most
likely own? - ANSWER -fixed premium deferred annuity
Explain the surrender charges of an annuity - ANSWER -annuity
owners may pay a fee for withdrawing from the annuity in the
early years, Example would be a 7% charge during the 1st 3
years of contract a 6% charge in the 4th and 5th year and so on.
distributions from a deferred annuity are taxable right upfront. It
is taxable on the GAIN.There is also a 10% penalty tax on
withdraws before age 59 1/2/ Not good for short term use or for
seniors. - ANSWER -Taxation on the distribution of annuities
deferred annuities accumulate funds for the future distribution.
under what circumstances are these funds forfeitable to the
insurer? - ANSWER -under no circumstances- accumulated
funds un a deferred annuity always belong to the owner. they
,are not forfeitable, even if the owner stops making premium
payments.
Under which of the following are payments made for as long as
it takes to liquidate the annuity principal, with the contract
owner choosing a monthly amount, and the insurance company
computing how long it will take to liquidate the principal at the
selected amount? - ANSWER -fixed amount certain payout
option
The typical settlement options involving life contingencies
generally include all of the following; - ANSWER -life income
with period certain option
straight life income, or pure life income, option
life income with guaranteed refund option
Sam is planning to buy a deferred annuity. When will he select a
settlement option? - ANSWER -He can choose the settlement
option when the deferred contract annuitizes or when he buys
the annuity.
Grace's annuity pays her an income for her lifetime, regardless
of how long she lives. When she dies, no further payments are
made to anyone. Which of the following types of settlement
options does she have? - ANSWER -straight, or pure, life
income
Which of the following best describes the tax treatment of
FIXED annuity death benefit payments? - ANSWER -The
,beneficiary must pay taxes on any amount he or she receives
that exceeds the sum of the premiums paid into the contract.
Under which one of the following circumstances does a fixed
deferred annuity contract provide a death benefit? - ANSWER -if
the contract owner or annuitant dies during the accumulation
period
Explain a fixed annuity death benefit - ANSWER -it is the
amount contributed into the contract plus interest earned on
that, minus any withdraws or charges.
A 2-tiered fixed annuity will pay a higher level of interest than
the standard declared rate fixed annuity under which condition?
- ANSWER -only if the annuity owner annuitizes the contract
What is the typical minimum interest rate compounded annually
for a deferred annuity? - ANSWER -2-3%
- no guarantees, premiums are invested into insurers
subaccounts. value of contract will increase of decrease
depending on the investment results in the variable
subaccounts. - ANSWER -Variable Annuities
what is the growth of a variable annuity's account value during
its accumulation period measured in terms of? - ANSWER -
Accumulation Units
, What are the four steps to determining the payment amount for
a variable annuity? - ANSWER -1. Determine the assumed
interest rate (AIR)
2. Use the AIR to calculate the 1st annual payment amount.
3. Convert the 1st annuity payment amount into a set number of
annuity units
4. Determine future annuity payment amounts by multiplying
annuity units by the current NAV
rate of return that the contract's values are assumed to earn
over the annutization period. Owners usually select the rate,
typically 3-5% - ANSWER -Assumed Interest Rate (AIR)
The annuity that has a guaranteed minimum interest rate and
allows the annuitant to invest money in an index (i.e.: S&P 500).
The investments grow as the index grows. - ANSWER -Equity
Indexed Annuity
Provides a Death Benefit if the annuitant or contract owner dies
before the contract is annuitized. (like declared rate fixed and
variable annuities). Can only increase in value. - ANSWER -
Equity Indexed annuity Death Benefits
Unlike an EIA, this annuity offers an interest rate feature that
makes it possible for the contract value to LOSE money if the
contact is surrendered before the end of its term. a fixed
annuity which shifts some of the investment risk to contract
holder. - ANSWER -Market Value Adjusted Annuity
