Types of Policies
An annuity buyer wants to select investment subaccounts and accepts that poor performance could reduce contract value below contributions. Which annuity is the direct match?
Answer and explanation
Answer: D. A variable annuity uses owner-selected subaccounts whose returns are not guaranteed, so the contract can lose value. Fixed products provide insurer-set guarantees, and an immediate fixed annuity does not offer the requested subaccount exposure.Source: NAIC — Buyer’s Guide for Deferred Annuities — Guide page 5, Variable Annuities
More types of policies questions
- A convertible term policy says conversion is available only under the policy's stated conversion provision. The owner asks for permanent coverage beyond the policy's allowed conversion amount without underwriting. What is the best response?
- A couple wants one policy whose death benefit becomes payable only after both insureds have died. Which structure meets that objective?
- A deferred annuity stops building value for future income and begins making scheduled income payments. Which phase has begun?
- A homeowner wants life coverage designed to decline roughly as a repayment mortgage balance declines. Which type is most directly suited to that pattern?
- A joint policy insures two partners and pays its death benefit when either partner is the first to die. How should the policy be classified?
- A married couple buys a survivorship life policy for estate tax planning. The husband dies first. What happens to the policy?
590 Texas questions like this one.
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