Summary: Series 7 Top-Off Exam Quiz Lesson 47 Annuities<br> This is Series 7 Top-Off Exam Quiz Lesson 47 Annuities<br> <br> 1. It is a contract wherein the buyer make payments and after some time, the insurance company will make a series of payments back to the buyer.<br> A. annuity contract<br> B. bond contract<br> C. option contract<br> D. variable contract<br> <br> 2. Which of the following is NOT true regarding the selling of an annuity contract?<br> A. The seller of an annuity contract has to have an insurance license.<br> B. The insurance license for selling an annuity contract is regulated at the national level.<br> C. The insurance license for selling an annuity contract is issued by the state.<br> D. All of the above are true regarding the selling of an annuity contract.<br> <br> 3. The earnings on the accumulated funds in an annuity grow tax-deferred.<br> A. True<br> B. False<br> <br> 4. Annuity contracts are sold by investment advisors.<br> A. True<br> B. False<br> <br> 5. Insurance company accounting is quite different from generally accepted accounting principles. <br> A. True<br> B. False<br> <br> 6. Which is the correct formula for a combined ratio?<br> A. (earned premiums – insured losses) ÷ expense of the company<br> B. (insured losses + expense of the company) ÷ earned premiums<br> C. earned premiums ÷ (insured losses + expense of the company)<br> D. expense of the company ÷ (earned premiums – insured losses)<br> <br> 7. An insurance company had an insurance losses of $10 million, expenses of $3.5 million, and an earned premium of $9 million. What is the combined ratio?<br> A. 29%<br> B. 67%<br> C. 150%<br> D. 350%<br> <br> 8. An insurance company is paying out more money than it earns when the combined ratio is ___.<br> A. a negative percentage<br> B. above 100%<br> C. below 100%<br> D. equal to 100%<br> <br> 9. Which of the following is true about a long tail business?<br> A. It happens when insurance premiums are collected over the years while it takes a long time before a claim arrives (e.g. medical malpractice insurance).<br> B. It happens when the combined ratio is greater than 100%.<br> C. It happens when the interest rates are low causing a higher investment income.<br> D. It happens when there is an investment profit that is not calculated in the combined ratio.<br> <br> 10. In a variable annuity, the insurance company guarantees the annuitant a specific rate of return on his investment over a certain period of time.<br> A. True<br> B. False<br> <br> 11. In a fixed annuity, if interest rates are low, the offer of the insurance company would be ___.<br> A. high<br> B. low<br> C. fixed regardless of the interest rates<br> D. The offer of the insurance company may vary but is independent from the interest rate.<br> <br> 12. In calculating how much a life annuity is going to pay an annuitant, an insurance company takes into consideration the annuitant’s ___.<br> (Select all that apply.)<br> A. age<br> B. financial status<br> C. gender<br> D. health<br> <br> 13. It is an annuity wherein a beneficiary could still receive the monthly payments even if the owner of the annuity has already died.<br> A. joint and last survivor annuity<br> B. life annuity<br> C. life annuity with a period certain<br> D. unit refund life annuity<br> <br> 14. Which of the following is true about joint and last survivor annuity? (Select all that apply.)<br> A. It would pay the annuitant until he dies.<br> B. It would pay the annuitant’s spouse until the spouse dies.<br> C. It would pay the annuitant’s children until the last child dies.<br> D. It would pay the annuitant’s estate until a certain period of time.<br> <br> 15. In a unit refund life annuity, if the annuitant and the beneficiary dies before...
