Types of Policies
Under a fixed indexed annuity’s basic index-crediting structure, what interest is added for an index term with a negative result?
Answer and explanation
Answer: B. The NAIC guide explains that when the index result is negative, zero interest is added and contract value does not decline from that index result so long as no withdrawal changes the outcome. The owner is not directly charged the full index loss, and prior returns or beneficiary choices do not set the credit.Source: NAIC — Buyer’s Guide for Deferred Annuities — Guide page 4, Fixed Indexed Annuities
More types of policies questions
- An insured develops a health condition halfway through a 20-year level term policy. What happens to the fixed death benefit and premium specified for that term?
- An insured outlives a return-of-premium term policy, and no death benefit was paid. What feature may then apply according to the contract?
- An insured’s health deteriorates during a renewable term policy. At the end of the term, which feature is most valuable?
- An insured's health worsens before a renewable term policy expires. The renewal right is still available. Which outcome best reflects that feature?
- An owner buys a $100,000 ordinary whole life policy. How do cash values accumulate over the life of the policy?
- An owner of a flexible-premium deferred annuity wants to know if they can continue making purchase payments in the future. Which statement is most accurate?
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