WISCONSIN LIFE EXAM FX FINAL STUDY PAPER
2026 COMPLETE QUESTIONS AND ANSWERS
◉ Exclusion Ratio. Answer: Fraction used to determine amount of
annual annuity income exempt from federal income tax. Exclusion
ratio is the total contribution or investment in the annuity divided
by the expected ratio.
◉ Fixed Annuity. Answer: An annuity that offers fixed payments and
guarantees a minimum rate of interest to be credited to the purchase
payment or payments.
◉ Immediate Annuity. Answer: Provides for payment of annuity
benefit at one payment interval from date of purchase. Can only be
purchased with a single payment.
◉ Joint and Survivor Option. Answer: A settlement option which
guarantees that benefits will be payed on a life-long basis to two or
more people. This option may include a period certain and the
amount payable is based on the ages of the beneficiaries. When the
surviving annuitant dies, no further payments are made to anyone. A
full survivor option pays the same benefit amount to the survivor. A
two-thirds option pays two-thirds of the original joint benefit. A one-
half survivor option pays one-half of the original joint benefit.
,◉ Life with Period Certain Annuity (Life Income with Term-Certain
Option). Answer: Designed to pay the annuitant an income for life,
but guarantees a definite minimum period of payments. The life with
period certain option provides income to the annuitant for life but
guarantees a minimum period of payments. Thus, if the annuitant
dies during the specified period, benefit payments continue to the
beneficiary for the remainder of that period.
◉ Market Value Adjusment. Answer: A market value adjustment can
be attached to a deferred annuity that features fixed interest rate
guarantees combined with an interest rate adjustment factor that
can cause the actual crediting rates to increase or decrease in
response to market conditions. Instead of having the annuity's
interest rate linked to an index with as with the equity-indexed
annuity, and MVA annuity's interest rate is guaranteed fixed if the
contract is held for the period specified in the policy. The MVA
feature applies only if the contract is surrendered before the
contract period expires. Otherwise, the annuity functions the same
way a fixed annuity does.
◉ Period Certain Annuity. Answer: Annuity that guarantees
payments to an ANNUITANT for a particular period of time. For
example, a 10-year period-certain annuity will guarantee annuity
payments for at least 10 years. If the annuitant dies before the 10
years have expired, the payments will continue to the beneficiaries
for the remaining term.
,◉ Periodic Payment Annuity (Flexible Premium). Answer: Describes
an annuity owner making multiple premium payments to
accumulate principal. Typically, after the initial premium, these
payments are flexible with frequency and amount.
◉ Principal. Answer: The original sum of money paid into an annuity
through premiums.
◉ Single Premium Annuity. Answer: An annuity for which the entire
premium is paid in one sum at the beginning of the contract period.
This can be deferred or immediate.
◉ Straight Life Annuity. Answer: An annuity income option that pays
a guaranteed income for the annuitant's lifetime, after which time
payments stop.
◉ Variable Annuity. Answer: Pays a lifetime income, but the income
payments vary depending on common stock prices. Shifts the
investment risk from the insurer to the contract owner. These
annuities invest deferred payments in an insurer's separate accounts
instead of an insurer's general accounts. Because these annuities are
based on non-guaranteed equity investments (such as common
stocks) a sales rep must be registered with the Financial Industry
Regulatory Authority (FINRA) as well as hold a state insurance
license.
, ◉ Which annuity payout option provides for the greatest monthly
payment?. Answer: Straight life
◉ Which annuity payout option makes no additional payments
regardless of when the annuitant dies?. Answer: Life only
◉ Annuity Certain. Answer: An annuity that provides a specified,
guaranteed monthly income for a stated number of years without
consideration of any life contingency.
◉ Fixed Immediate Annuity. Answer: The amount of this payment is
dependent upon starting principal, interest, and the contract's
income period.
◉ Annuitization Phase. Answer: Phase in which investor can start
taking payments from the variable annuity. Accumulation units are
converted into a fixed number of annuity units (determines the
amount the annuitant will receive each month).
◉ An annuity is primarily used to provide.... Answer: Retirement
income
◉ Under a non-qualified annuity, interest is taxed after the....
Answer: Exclusion ratio has been calculated.
2026 COMPLETE QUESTIONS AND ANSWERS
◉ Exclusion Ratio. Answer: Fraction used to determine amount of
annual annuity income exempt from federal income tax. Exclusion
ratio is the total contribution or investment in the annuity divided
by the expected ratio.
◉ Fixed Annuity. Answer: An annuity that offers fixed payments and
guarantees a minimum rate of interest to be credited to the purchase
payment or payments.
◉ Immediate Annuity. Answer: Provides for payment of annuity
benefit at one payment interval from date of purchase. Can only be
purchased with a single payment.
◉ Joint and Survivor Option. Answer: A settlement option which
guarantees that benefits will be payed on a life-long basis to two or
more people. This option may include a period certain and the
amount payable is based on the ages of the beneficiaries. When the
surviving annuitant dies, no further payments are made to anyone. A
full survivor option pays the same benefit amount to the survivor. A
two-thirds option pays two-thirds of the original joint benefit. A one-
half survivor option pays one-half of the original joint benefit.
,◉ Life with Period Certain Annuity (Life Income with Term-Certain
Option). Answer: Designed to pay the annuitant an income for life,
but guarantees a definite minimum period of payments. The life with
period certain option provides income to the annuitant for life but
guarantees a minimum period of payments. Thus, if the annuitant
dies during the specified period, benefit payments continue to the
beneficiary for the remainder of that period.
◉ Market Value Adjusment. Answer: A market value adjustment can
be attached to a deferred annuity that features fixed interest rate
guarantees combined with an interest rate adjustment factor that
can cause the actual crediting rates to increase or decrease in
response to market conditions. Instead of having the annuity's
interest rate linked to an index with as with the equity-indexed
annuity, and MVA annuity's interest rate is guaranteed fixed if the
contract is held for the period specified in the policy. The MVA
feature applies only if the contract is surrendered before the
contract period expires. Otherwise, the annuity functions the same
way a fixed annuity does.
◉ Period Certain Annuity. Answer: Annuity that guarantees
payments to an ANNUITANT for a particular period of time. For
example, a 10-year period-certain annuity will guarantee annuity
payments for at least 10 years. If the annuitant dies before the 10
years have expired, the payments will continue to the beneficiaries
for the remaining term.
,◉ Periodic Payment Annuity (Flexible Premium). Answer: Describes
an annuity owner making multiple premium payments to
accumulate principal. Typically, after the initial premium, these
payments are flexible with frequency and amount.
◉ Principal. Answer: The original sum of money paid into an annuity
through premiums.
◉ Single Premium Annuity. Answer: An annuity for which the entire
premium is paid in one sum at the beginning of the contract period.
This can be deferred or immediate.
◉ Straight Life Annuity. Answer: An annuity income option that pays
a guaranteed income for the annuitant's lifetime, after which time
payments stop.
◉ Variable Annuity. Answer: Pays a lifetime income, but the income
payments vary depending on common stock prices. Shifts the
investment risk from the insurer to the contract owner. These
annuities invest deferred payments in an insurer's separate accounts
instead of an insurer's general accounts. Because these annuities are
based on non-guaranteed equity investments (such as common
stocks) a sales rep must be registered with the Financial Industry
Regulatory Authority (FINRA) as well as hold a state insurance
license.
, ◉ Which annuity payout option provides for the greatest monthly
payment?. Answer: Straight life
◉ Which annuity payout option makes no additional payments
regardless of when the annuitant dies?. Answer: Life only
◉ Annuity Certain. Answer: An annuity that provides a specified,
guaranteed monthly income for a stated number of years without
consideration of any life contingency.
◉ Fixed Immediate Annuity. Answer: The amount of this payment is
dependent upon starting principal, interest, and the contract's
income period.
◉ Annuitization Phase. Answer: Phase in which investor can start
taking payments from the variable annuity. Accumulation units are
converted into a fixed number of annuity units (determines the
amount the annuitant will receive each month).
◉ An annuity is primarily used to provide.... Answer: Retirement
income
◉ Under a non-qualified annuity, interest is taxed after the....
Answer: Exclusion ratio has been calculated.
