LOMA 281 Module 2 Lesson 3 UPDATED
ACTUAL Questions and CORRECT
Answers
Annuity - CORRECT ANSWER - insurance against the risk of outliving one's financial
resources
annuity contract - CORRECT ANSWER - A contract under which an insurer promises to
make a series of periodic payments to a named individual in exchange for a premium or a series
of premiums.
contract owner - CORRECT ANSWER - The person or other entity who owns and
exercises all the rights and privileges of an annuity contract.
annuitant - CORRECT ANSWER - The person whose lifetime is used to determine the
amount of benefits payable under an annuity contract. If not the contract owner, they are not a
party to the contract.
payee - CORRECT ANSWER - The person or entity who receives the periodic income
payments according to the terms of an annuity contract. If not the contract owner, they are not a
party to the contract.
beneficiary - CORRECT ANSWER - The party designated to receive the policy proceeds
following the death of the insured. Also known as first beneficiary.
accumulation value - CORRECT ANSWER - equals the premiums paid, plus investment
earnings, less withdrawals or fees.
fixed annuity - CORRECT ANSWER - An annuity contract under which the insurer
guarantees the minimum interest rate that will be applied to the annuity's accumulation value
during the accumulation period and the minimum amount of the periodic income payments that
will be made during the payout period.
, variable annuity - CORRECT ANSWER - An annuity under which the amount of the
accumulation value and the amount of the periodic income payments fluctuate in accordance
with the performance of one or more specified fund options. Contract owner assumes most or all
of the risk.
hybrid annuities - CORRECT ANSWER - combine features of fixed annuities and variable
annuities.
fixed-indexed annuity - CORRECT ANSWER - offers principal and interest rate
guarantees, as well as the possibility of additional earnings based on changes in a published
index, such as the Standard & Poor's 500 Composite Stock Price Index (the S&P 500)
market value adjusted annuity - CORRECT ANSWER - An annuity that offers multiple
guarantee periods and multiple fixed interest rates.
deferred annuity - CORRECT ANSWER - pay a death benefit to a named beneficiary if
the contract owner dies before annuity payments begin, the greater of the accumulated cash value
or premiums paid less withdrawals.
guaranteed minimum death benefit - CORRECT ANSWER - A variable annuity contract
feature which guarantees that, if the annuitant dies before periodic income payments begin, the
beneficiary will receive at least a stated amount, regardless of the contract's accumulation value
at that time.
guaranteed minimum income benefit - CORRECT ANSWER - A variable annuity contract
feature that guarantees a minimum protected value that can be converted into periodic income
payment regardless of the annuity's investment performance. The contract must remain in force
for a specified period of time.
guaranteed minimum withdrawal benefit - CORRECT ANSWER - A variable annuity
contract 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.
ACTUAL Questions and CORRECT
Answers
Annuity - CORRECT ANSWER - insurance against the risk of outliving one's financial
resources
annuity contract - CORRECT ANSWER - A contract under which an insurer promises to
make a series of periodic payments to a named individual in exchange for a premium or a series
of premiums.
contract owner - CORRECT ANSWER - The person or other entity who owns and
exercises all the rights and privileges of an annuity contract.
annuitant - CORRECT ANSWER - The person whose lifetime is used to determine the
amount of benefits payable under an annuity contract. If not the contract owner, they are not a
party to the contract.
payee - CORRECT ANSWER - The person or entity who receives the periodic income
payments according to the terms of an annuity contract. If not the contract owner, they are not a
party to the contract.
beneficiary - CORRECT ANSWER - The party designated to receive the policy proceeds
following the death of the insured. Also known as first beneficiary.
accumulation value - CORRECT ANSWER - equals the premiums paid, plus investment
earnings, less withdrawals or fees.
fixed annuity - CORRECT ANSWER - An annuity contract under which the insurer
guarantees the minimum interest rate that will be applied to the annuity's accumulation value
during the accumulation period and the minimum amount of the periodic income payments that
will be made during the payout period.
, variable annuity - CORRECT ANSWER - An annuity under which the amount of the
accumulation value and the amount of the periodic income payments fluctuate in accordance
with the performance of one or more specified fund options. Contract owner assumes most or all
of the risk.
hybrid annuities - CORRECT ANSWER - combine features of fixed annuities and variable
annuities.
fixed-indexed annuity - CORRECT ANSWER - offers principal and interest rate
guarantees, as well as the possibility of additional earnings based on changes in a published
index, such as the Standard & Poor's 500 Composite Stock Price Index (the S&P 500)
market value adjusted annuity - CORRECT ANSWER - An annuity that offers multiple
guarantee periods and multiple fixed interest rates.
deferred annuity - CORRECT ANSWER - pay a death benefit to a named beneficiary if
the contract owner dies before annuity payments begin, the greater of the accumulated cash value
or premiums paid less withdrawals.
guaranteed minimum death benefit - CORRECT ANSWER - A variable annuity contract
feature which guarantees that, if the annuitant dies before periodic income payments begin, the
beneficiary will receive at least a stated amount, regardless of the contract's accumulation value
at that time.
guaranteed minimum income benefit - CORRECT ANSWER - A variable annuity contract
feature that guarantees a minimum protected value that can be converted into periodic income
payment regardless of the annuity's investment performance. The contract must remain in force
for a specified period of time.
guaranteed minimum withdrawal benefit - CORRECT ANSWER - A variable annuity
contract 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.
