Annuity – WebCE Final Exam Questions
with Verified Answers 2025
1.Annuitization is - ANSWER Accumulated values are converted into a stream of
periodic income payments.
2.All of the following are common modal annuitization payout options EXCEPT: -
ANSWER lump-sum
3. At the age of 42, Steve purchased a fixed deferred annuity from Mega Mutual
Life with a single premium deposit of $10,000. The declared interest rate on
Steve's contract when it was issued was 5 percent, and the contract guarantees a
minimum rate of 3 percent. The initial declared rate is payable for two years; the
renewal rate for year three and later is subject to change. How much interest will
be credited to Steve's contract at the end of year one? - ANSWER $500
4.At the time he purchased his variable annuity, Ahmed directed $5,000 of his
premium into Subaccount A when the unit value was $10. A year later, the unit
value had increased to $15. Assuming he made no additional premium deposits,
what is the value of Ahmed's investment in Subaccount A now? - ANSWER $7,500
5. At what point are a nonqualified annuity's earnings subject to income tax? -
ANSWER when they are withdrawn from the contract
6. At what point does the beneficiary to an annuity acquire rights in the contract? -
ANSWER (Wrong) upon contract issue and throughout the life of the contract,
until the death of the contract owner or annuitant
7. Brad is a registered representative with a broker-dealer and is licensed to sell
fixed and variable annuities, as well as mutual funds. How can Brad comply with
, the best interest requirements under the NAIC's annuity model regulation? -
ANSWER by complying with applicable SEC and FINRA rules pertaining to best
interest obligations and supervision of annuity sales
8. Darcy owns an indexed annuity. The index that supports her annuity was at 1000
when the contract's interest crediting period began and 1200 when the crediting
period ended. What is the index increase? - ANSWER 20 percent
9. For an indexed annuity, what is credited to the contract at the end of each
interest crediting term? - ANSWER (Wrong) the index interest rate
10. For most indexed annuities, what is the specified floor? - ANSWER 0 percent
11, For what primary reason must Annuity Producer Gene collect information and
create a consumer profile? - ANSWER so that Gene can evaluate the customer's
needs and objectives and analyze annuity products that will best serve these needs
and objectives
12. For what reason would an individual choose a variable annuity over a fixed
annuity? - ANSWER for the potential to earn greater contract growth
13. For which of the following needs are traditional deferred annuities best suited?
- ANSWER retirement planning
14. For whom is joint ownership of an annuity often reserved? - ANSWER spouses
15. Generally speaking, how long is the accumulation period for immediate
annuities? - ANSWER one month to one year
with Verified Answers 2025
1.Annuitization is - ANSWER Accumulated values are converted into a stream of
periodic income payments.
2.All of the following are common modal annuitization payout options EXCEPT: -
ANSWER lump-sum
3. At the age of 42, Steve purchased a fixed deferred annuity from Mega Mutual
Life with a single premium deposit of $10,000. The declared interest rate on
Steve's contract when it was issued was 5 percent, and the contract guarantees a
minimum rate of 3 percent. The initial declared rate is payable for two years; the
renewal rate for year three and later is subject to change. How much interest will
be credited to Steve's contract at the end of year one? - ANSWER $500
4.At the time he purchased his variable annuity, Ahmed directed $5,000 of his
premium into Subaccount A when the unit value was $10. A year later, the unit
value had increased to $15. Assuming he made no additional premium deposits,
what is the value of Ahmed's investment in Subaccount A now? - ANSWER $7,500
5. At what point are a nonqualified annuity's earnings subject to income tax? -
ANSWER when they are withdrawn from the contract
6. At what point does the beneficiary to an annuity acquire rights in the contract? -
ANSWER (Wrong) upon contract issue and throughout the life of the contract,
until the death of the contract owner or annuitant
7. Brad is a registered representative with a broker-dealer and is licensed to sell
fixed and variable annuities, as well as mutual funds. How can Brad comply with
, the best interest requirements under the NAIC's annuity model regulation? -
ANSWER by complying with applicable SEC and FINRA rules pertaining to best
interest obligations and supervision of annuity sales
8. Darcy owns an indexed annuity. The index that supports her annuity was at 1000
when the contract's interest crediting period began and 1200 when the crediting
period ended. What is the index increase? - ANSWER 20 percent
9. For an indexed annuity, what is credited to the contract at the end of each
interest crediting term? - ANSWER (Wrong) the index interest rate
10. For most indexed annuities, what is the specified floor? - ANSWER 0 percent
11, For what primary reason must Annuity Producer Gene collect information and
create a consumer profile? - ANSWER so that Gene can evaluate the customer's
needs and objectives and analyze annuity products that will best serve these needs
and objectives
12. For what reason would an individual choose a variable annuity over a fixed
annuity? - ANSWER for the potential to earn greater contract growth
13. For which of the following needs are traditional deferred annuities best suited?
- ANSWER retirement planning
14. For whom is joint ownership of an annuity often reserved? - ANSWER spouses
15. Generally speaking, how long is the accumulation period for immediate
annuities? - ANSWER one month to one year
