Types of Policies
A buyer wants to fund a deferred annuity with one lump-sum purchase payment and make no later premiums. Which funding form fits?
Answer and explanation
Answer: A. A single-premium annuity is funded with one purchase payment. Flexible premium uses multiple payments, and the remaining choices describe premium structures for life insurance rather than the requested annuity funding form.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
- To what external benchmark is the interest crediting rate of an equity-indexed life insurance policy tied?
- Two business owners need one life policy to provide funds when the first of them dies. Which policy trigger is required?
- Two business partners purchase a joint life policy to fund a buy-sell agreement. Partner A dies. What happens to the policy after the death benefit is paid?
- Under a fixed indexed annuity’s basic index-crediting structure, what interest is added for an index term with a negative result?
- Under IRC § 7702 corridor rules, what must an insurer do if cash value growth in a universal life policy threatens to breach the statutory life insurance definition ratio?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
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