MICHIGAN VARIABLE ANNUITIES EXAM COMPLETE
QUESTIONS AND 100% VERIFIED ANSWERS (PASS
GUARANTEE)
1. What is a variable annuity? A contract between an individual and an
insurance company where the individual makes payments in return for periodic
payments from the insurer, with the rate of growth being variable rather than
fixed.
2. Who bears the investment risk in a variable annuity? The contract owner
bears the investment risk due to the variable rate of growth.
3. How does the SEC classify variable annuities? As a security rather than a
traditional life insurance product.
4. What is the difference between fixed and variable annuities? Fixed
annuities guarantee a fixed growth rate and fixed payment amounts, while
variable annuities have variable growth rates based on investment performance.
5. What are accumulation units? An accounting measure used to determine an
annuitant's proportionate interest in the insurer's separate account during the
accumulation phase.
6. What are annuity units? An accounting measure used to determine the
amount of each payment during the distribution stage of an annuity.
7. When are accumulation units converted to annuity units? When the
annuity is annuitized (enters the payout phase).
8. Do accumulation units change in value? Yes, both the number and value of
accumulation units can change based on premium payments and market
fluctuations.
9. Do annuity units change in number once established? No, once the
number of annuity units is set at annuitization, it remains fixed. Only the value
of each unit changes.
10. What is a deferred annuity? An annuity in which payments begin more
than one payment period (one month to one year) after the purchase date.
,11. What is an immediate annuity? An annuity where payments begin within
one payment period after purchase.
12. What is a single premium annuity? An annuity purchased with one lump
sum payment.
13. What is a flexible premium annuity? A deferred annuity purchased with a
series of payments that may be irregular in amount or timing.
14. What is the separate account? An account established by the insurer that
holds the investments for variable products, separate from the general account.
15. What is the general account? The account that holds all assets of an
insurer other than those in separate accounts, typically invested conservatively.
16. What types of investments are typically in a separate account? Stocks,
bonds, and mutual funds seeking higher returns.
17. What is the annuitant? The person on whose life the annuity payments are
based.
18. Who is the owner of an annuity? The party who pays premiums and has
the right to name beneficiaries and surrender the annuity.
19. Must the owner and annuitant be the same person? No, they can be
different people.
20. What is the accumulation phase? The period during which premium
payments are made and the account value grows.
21. What is the annuitization phase? The period during which the annuity
makes periodic payments to the annuitant.
22. Can variable annuities lose value? Yes, because they are subject to market
risk and investment performance.
23. What is a prospectus? A legal document that provides detailed information
about a variable product's features, risks, and costs.
24. Is a prospectus required for variable annuities? Yes, a prospectus must
be provided to potential purchasers before or at the time of purchase.
25. What is dollar cost averaging? An investing technique where a fixed
amount is invested at regular intervals, regardless of market conditions.
, 26. What is diversification? An investing technique characterized by buying
various investments so market risk is spread out and reduced.
27. What is the assumed interest rate (AIR)? An arbitrary rate of return set
by the insurer for any separate account they establish.
28. What happens if investment returns exceed the AIR? Variable annuity
unit values and payments increase.
29. What happens if investment returns fall below the AIR? Variable
annuity unit values and payments decrease.
30. Does the AIR apply to accumulation values? No, only to annuity unit
values and payouts, not to variable accumulation values.
Section 2: Licensing Requirements (Questions 31-50)
31. What must an applicant have to sell variable annuities in Michigan?
FINRA registration, SIE exam completion, Series 6 or 7 exam completion, and
passage of the Michigan variable annuities examination.
32. Is prelicensing education required for the Michigan Variable Annuities
exam? No, prelicensing education is not required for the VA line of authority.
33. Do continuing education requirements apply to the VA line of
authority? Yes, continuing education requirements under MCL 500.1204c do
apply.
34. What is the SIE exam? The Securities Industry Essentials exam required
by FINRA.
35. Can an agent with only a Series 6 license sell variable annuities? Yes,
either Series 6 or Series 7 qualifies along with the other requirements.
36. What is FINRA? The Financial Industry Regulatory Authority, which
regulates securities broker-dealers.
37. Must a non-resident producer have a VA license in their home state?
Yes, applicants must hold a variable annuities/variable life line of authority in
their home state.
38. Is SEC registration required to sell variable annuities? No, SEC
registration is not required; FINRA registration is required.
QUESTIONS AND 100% VERIFIED ANSWERS (PASS
GUARANTEE)
1. What is a variable annuity? A contract between an individual and an
insurance company where the individual makes payments in return for periodic
payments from the insurer, with the rate of growth being variable rather than
fixed.
2. Who bears the investment risk in a variable annuity? The contract owner
bears the investment risk due to the variable rate of growth.
3. How does the SEC classify variable annuities? As a security rather than a
traditional life insurance product.
4. What is the difference between fixed and variable annuities? Fixed
annuities guarantee a fixed growth rate and fixed payment amounts, while
variable annuities have variable growth rates based on investment performance.
5. What are accumulation units? An accounting measure used to determine an
annuitant's proportionate interest in the insurer's separate account during the
accumulation phase.
6. What are annuity units? An accounting measure used to determine the
amount of each payment during the distribution stage of an annuity.
7. When are accumulation units converted to annuity units? When the
annuity is annuitized (enters the payout phase).
8. Do accumulation units change in value? Yes, both the number and value of
accumulation units can change based on premium payments and market
fluctuations.
9. Do annuity units change in number once established? No, once the
number of annuity units is set at annuitization, it remains fixed. Only the value
of each unit changes.
10. What is a deferred annuity? An annuity in which payments begin more
than one payment period (one month to one year) after the purchase date.
,11. What is an immediate annuity? An annuity where payments begin within
one payment period after purchase.
12. What is a single premium annuity? An annuity purchased with one lump
sum payment.
13. What is a flexible premium annuity? A deferred annuity purchased with a
series of payments that may be irregular in amount or timing.
14. What is the separate account? An account established by the insurer that
holds the investments for variable products, separate from the general account.
15. What is the general account? The account that holds all assets of an
insurer other than those in separate accounts, typically invested conservatively.
16. What types of investments are typically in a separate account? Stocks,
bonds, and mutual funds seeking higher returns.
17. What is the annuitant? The person on whose life the annuity payments are
based.
18. Who is the owner of an annuity? The party who pays premiums and has
the right to name beneficiaries and surrender the annuity.
19. Must the owner and annuitant be the same person? No, they can be
different people.
20. What is the accumulation phase? The period during which premium
payments are made and the account value grows.
21. What is the annuitization phase? The period during which the annuity
makes periodic payments to the annuitant.
22. Can variable annuities lose value? Yes, because they are subject to market
risk and investment performance.
23. What is a prospectus? A legal document that provides detailed information
about a variable product's features, risks, and costs.
24. Is a prospectus required for variable annuities? Yes, a prospectus must
be provided to potential purchasers before or at the time of purchase.
25. What is dollar cost averaging? An investing technique where a fixed
amount is invested at regular intervals, regardless of market conditions.
, 26. What is diversification? An investing technique characterized by buying
various investments so market risk is spread out and reduced.
27. What is the assumed interest rate (AIR)? An arbitrary rate of return set
by the insurer for any separate account they establish.
28. What happens if investment returns exceed the AIR? Variable annuity
unit values and payments increase.
29. What happens if investment returns fall below the AIR? Variable
annuity unit values and payments decrease.
30. Does the AIR apply to accumulation values? No, only to annuity unit
values and payouts, not to variable accumulation values.
Section 2: Licensing Requirements (Questions 31-50)
31. What must an applicant have to sell variable annuities in Michigan?
FINRA registration, SIE exam completion, Series 6 or 7 exam completion, and
passage of the Michigan variable annuities examination.
32. Is prelicensing education required for the Michigan Variable Annuities
exam? No, prelicensing education is not required for the VA line of authority.
33. Do continuing education requirements apply to the VA line of
authority? Yes, continuing education requirements under MCL 500.1204c do
apply.
34. What is the SIE exam? The Securities Industry Essentials exam required
by FINRA.
35. Can an agent with only a Series 6 license sell variable annuities? Yes,
either Series 6 or Series 7 qualifies along with the other requirements.
36. What is FINRA? The Financial Industry Regulatory Authority, which
regulates securities broker-dealers.
37. Must a non-resident producer have a VA license in their home state?
Yes, applicants must hold a variable annuities/variable life line of authority in
their home state.
38. Is SEC registration required to sell variable annuities? No, SEC
registration is not required; FINRA registration is required.
