VARIABLE PRODUCTS EXAM
80+ (2026 A+ Graded) Exam-Style Questions | Verified Solutions |
Complete Answer Key
100% Guarantee Pass
📋 DOCUMENT OVERVIEW 80 Qs
This document, "Variable Products Exam," focuses on the topics of variable annuities, variable life
insurance policies, universal life policies, and policy replacements. It provides 80 exam-style questions
with correct answers and detailed explanations/rationales, enabling students to thoroughly review and
comprehend these concepts. By utilizing this resource, students can effectively study, review, and
solidify their understanding of these insurance products for exam preparation.
✓ Verified Answers ✓ Exam Ready ✓ Study Guide
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EXAM QUESTIONS
QUESTION 1
All of the following are incorrect about variable annuities EXCEPT
CORRECT ANSWER
The amount of the monthly income payout is not guaranteed.
RATIONALE: This statement is correct because it contradicts the fundamental feature of variable annuities, which is that
they do offer a guaranteed minimum income payout, typically through an optional rider, in exchange for an additional
fee. This guaranteed income feature is a crucial aspect that differentiates variable annuities from other investment
products, making the statement a characteristic not inherently incorrect about variable annuities.
QUESTION 2
Mr and Mrs Williams have purchased a joint and two-thirds survivor immediate variable annuity. Upon
the death of the first of them, the survivor will receive
CORRECT ANSWER
A monthly payment for life that is equal to two-thirds of what the annuity units would have provided prior
to the death of the first annuitant
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, RATIONALE: This is the correct answer because a joint and two-thirds survivor immediate variable annuity is designed
to provide a benefit to the surviving spouse, typically two-thirds of the original amount, to ensure they maintain a
significant portion of the original income. The "two-thirds" refers to the percentage of the annuity units that the survivor
will receive upon the death of the first annuitant, providing a reduced but still significant income stream for the
remaining spouse.
QUESTION 3
All of the following are disclosed prior to or concurrent with the application for variable life insurance
policy EXCEPT
CORRECT ANSWER
A statement of the net investment returns of the separate account for each of the last 5 years for which
the separate account was in existence
RATIONALE: This option is the correct answer because the disclosure of a statement of net investment returns for a
separate account is not a requirement prior to or concurrent with the application for a variable life insurance policy, as it
typically occurs annually or at the end of the policy term. The disclosure of such information is generally provided to
policyholders after the policy has been issued, allowing them to review the performance of their investments.
QUESTION 4
When applying to purchase a variable annuity, all of the following disclosures are required EXCEPT
CORRECT ANSWER
the tax status of the payout
RATIONALE: When applying to purchase a variable annuity, the tax status of the payout is not a disclosure that is
typically required at the time of purchase, as variable annuity contracts do not guarantee a specific payout amount or
rate and the tax implications can vary based on individual circumstances. This allows the insurer to delay disclosing the
tax status of the payout until the contract is in effect and the policyholder's investment options and projected payout are
more clearly defined.
QUESTION 5
The application for a variable life insurance policy must contain all of the following EXCEPt
CORRECT ANSWER
None of these are exceptions
RATIONALE: The phrase "EXCEPT" is a key indicator that the question is asking for information that is not required or
included. In this context, "None of these are exceptions" implies that all the options listed are actually necessary for the
application, making them not exceptions to the requirements.
QUESTION 6
In a universal life policy, the premium "suggested" by the issuer is called
CORRECT ANSWER
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, a target premium
RATIONALE: In a universal life policy, the premium suggested by the issuer is called the target premium because it is
the minimum amount required to cover the insurance company's costs and ensure the policy's long-term viability,
allowing for potential cash value accumulation. This premium is considered "target" because it serves as a benchmark or
goal for policyholders to achieve, helping to maintain a balance between premium payments and policy benefits.
QUESTION 7
A variable annuity contract owner paid a $300 premium on a date when the accumulation unit price
was $6.60. How many units were acquired?
CORRECT ANSWER
45.45
RATIONALE: The variable annuity contract owner acquired units by dividing the premium paid by the accumulation unit
price, which involves simple division where the premium is the dividend and the accumulation unit price is the divisor,
resulting in the number of units acquired. This calculation is based on the principle that the premium is being applied to
purchase whole units, so any fractional result is rounded down to the nearest whole number, but in this case the division
yields a whole number, 45.45, which is an exact result without rounding.
QUESTION 8
If a variable policy owner stops paying premiums and gives no notice to the insurer, which of the
following is likely to occur?
CORRECT ANSWER
The cash value in the policy will be used to purchase extended term insurance
RATIONALE: When a variable policy owner stops paying premiums without notice, the policy lapses, and the cash value
is used to purchase a reduced amount of extended term insurance, also known as a paid-up or reduced paid-up policy.
This occurs because the cash value has accumulated over time and can be used to purchase a smaller amount of
coverage that will remain in force for a specified period, typically the term of the policy or until a selected maturity date.
QUESTION 9
All of the following sub accounts share a similar investment objective EXCEPT
CORRECT ANSWER
Money Market Account
RATIONALE: A Money Market Account is typically designed for liquidity and low-risk investments, focusing on short-term
returns, which differs from the investment objectives of its counterparts. This distinct focus on liquidity and low-risk
investments sets it apart from other sub-accounts, making it the correct exception.
QUESTION 10
Bob just bought a $50,000 variable life policy. Which of the following is NOT true.
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80+ (2026 A+ Graded) Exam-Style Questions | Verified Solutions |
Complete Answer Key
100% Guarantee Pass
📋 DOCUMENT OVERVIEW 80 Qs
This document, "Variable Products Exam," focuses on the topics of variable annuities, variable life
insurance policies, universal life policies, and policy replacements. It provides 80 exam-style questions
with correct answers and detailed explanations/rationales, enabling students to thoroughly review and
comprehend these concepts. By utilizing this resource, students can effectively study, review, and
solidify their understanding of these insurance products for exam preparation.
✓ Verified Answers ✓ Exam Ready ✓ Study Guide
Trusted by thousands of students and professionals worldwide
EXAM QUESTIONS
QUESTION 1
All of the following are incorrect about variable annuities EXCEPT
CORRECT ANSWER
The amount of the monthly income payout is not guaranteed.
RATIONALE: This statement is correct because it contradicts the fundamental feature of variable annuities, which is that
they do offer a guaranteed minimum income payout, typically through an optional rider, in exchange for an additional
fee. This guaranteed income feature is a crucial aspect that differentiates variable annuities from other investment
products, making the statement a characteristic not inherently incorrect about variable annuities.
QUESTION 2
Mr and Mrs Williams have purchased a joint and two-thirds survivor immediate variable annuity. Upon
the death of the first of them, the survivor will receive
CORRECT ANSWER
A monthly payment for life that is equal to two-thirds of what the annuity units would have provided prior
to the death of the first annuitant
Trusted by thousands of students and professionals worldwide Page 1 of 21
, RATIONALE: This is the correct answer because a joint and two-thirds survivor immediate variable annuity is designed
to provide a benefit to the surviving spouse, typically two-thirds of the original amount, to ensure they maintain a
significant portion of the original income. The "two-thirds" refers to the percentage of the annuity units that the survivor
will receive upon the death of the first annuitant, providing a reduced but still significant income stream for the
remaining spouse.
QUESTION 3
All of the following are disclosed prior to or concurrent with the application for variable life insurance
policy EXCEPT
CORRECT ANSWER
A statement of the net investment returns of the separate account for each of the last 5 years for which
the separate account was in existence
RATIONALE: This option is the correct answer because the disclosure of a statement of net investment returns for a
separate account is not a requirement prior to or concurrent with the application for a variable life insurance policy, as it
typically occurs annually or at the end of the policy term. The disclosure of such information is generally provided to
policyholders after the policy has been issued, allowing them to review the performance of their investments.
QUESTION 4
When applying to purchase a variable annuity, all of the following disclosures are required EXCEPT
CORRECT ANSWER
the tax status of the payout
RATIONALE: When applying to purchase a variable annuity, the tax status of the payout is not a disclosure that is
typically required at the time of purchase, as variable annuity contracts do not guarantee a specific payout amount or
rate and the tax implications can vary based on individual circumstances. This allows the insurer to delay disclosing the
tax status of the payout until the contract is in effect and the policyholder's investment options and projected payout are
more clearly defined.
QUESTION 5
The application for a variable life insurance policy must contain all of the following EXCEPt
CORRECT ANSWER
None of these are exceptions
RATIONALE: The phrase "EXCEPT" is a key indicator that the question is asking for information that is not required or
included. In this context, "None of these are exceptions" implies that all the options listed are actually necessary for the
application, making them not exceptions to the requirements.
QUESTION 6
In a universal life policy, the premium "suggested" by the issuer is called
CORRECT ANSWER
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, a target premium
RATIONALE: In a universal life policy, the premium suggested by the issuer is called the target premium because it is
the minimum amount required to cover the insurance company's costs and ensure the policy's long-term viability,
allowing for potential cash value accumulation. This premium is considered "target" because it serves as a benchmark or
goal for policyholders to achieve, helping to maintain a balance between premium payments and policy benefits.
QUESTION 7
A variable annuity contract owner paid a $300 premium on a date when the accumulation unit price
was $6.60. How many units were acquired?
CORRECT ANSWER
45.45
RATIONALE: The variable annuity contract owner acquired units by dividing the premium paid by the accumulation unit
price, which involves simple division where the premium is the dividend and the accumulation unit price is the divisor,
resulting in the number of units acquired. This calculation is based on the principle that the premium is being applied to
purchase whole units, so any fractional result is rounded down to the nearest whole number, but in this case the division
yields a whole number, 45.45, which is an exact result without rounding.
QUESTION 8
If a variable policy owner stops paying premiums and gives no notice to the insurer, which of the
following is likely to occur?
CORRECT ANSWER
The cash value in the policy will be used to purchase extended term insurance
RATIONALE: When a variable policy owner stops paying premiums without notice, the policy lapses, and the cash value
is used to purchase a reduced amount of extended term insurance, also known as a paid-up or reduced paid-up policy.
This occurs because the cash value has accumulated over time and can be used to purchase a smaller amount of
coverage that will remain in force for a specified period, typically the term of the policy or until a selected maturity date.
QUESTION 9
All of the following sub accounts share a similar investment objective EXCEPT
CORRECT ANSWER
Money Market Account
RATIONALE: A Money Market Account is typically designed for liquidity and low-risk investments, focusing on short-term
returns, which differs from the investment objectives of its counterparts. This distinct focus on liquidity and low-risk
investments sets it apart from other sub-accounts, making it the correct exception.
QUESTION 10
Bob just bought a $50,000 variable life policy. Which of the following is NOT true.
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