Types of Policies
A buyer wants to fund a deferred annuity through a series of purchase payments rather than one lump sum. Which funding pattern should the buyer select?
Answer and explanation
Answer: A. Deferred annuities may be funded with one premium or more than one premium. A flexible-premium arrangement matches a series of purchase payments, while single premium requires one payment and the remaining choices are life-insurance structures.Source: NAIC — Buyer’s Guide for Deferred Annuities — Guide page 2, How Deferred Annuities Are Different — one or more than one premium payment
More types of policies questions
- During which annuity phase does the contract value grow before scheduled income payments begin?
- How are accumulation units converted in a variable annuity when the contract owner chooses to annuitize?
- How do premiums behave over time in a typical decreasing term life policy?
- How does a life annuity with 10-year period certain settlement option protect beneficiaries?
- How does the death benefit of an increasing term rider or policy change over time?
- How does the premium for a joint life (first-to-die) policy compare to buying two separate individual policies of the same face amount?
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