MICHIGAN VARIABLE ANNUITIES 2025/2026 QUESTIONS
WITH ANSWERS GRADED A+
✔✔immediate annuity - ✔✔An annuity, purchased with a single premium payment, in
which annuity payments begin the next period (one month to one year) after purchase
✔✔income - ✔✔An investment objective that focuses on dividends and interest to
produce income rather than capital appreciation
✔✔Indirect method - ✔✔an approach to managing a variable products separate
account that uses a unit investment trust contract with an investment company external
to the insurer
✔✔interest-only option - ✔✔An insurance or annuity settlement option in which the
insurer holds the principal and pays interest to the beneficiary with a guaranteed
minimum rate
✔✔Investment Company Act of 1940 - ✔✔A federal statute requiring insurer separate
accounts to be registered as investment companies with the securities industry
✔✔Investment management fee - ✔✔with a variable life insurance or variable annuity
contract, this is the amount paid to an investment advisor for providing professional
investment advice for an insurer separate account
✔✔Joint Life Income - ✔✔an insurance or annuity settlement option in which payments
continue for as long as either of two annuitants are living
✔✔Life income - ✔✔an insurance or annuity settlement option in which payments are
based on mortality and interest calculations and continue for as long as the annuitant
lives
✔✔Life income with period certain - ✔✔An insurance and annuity settlement option in
which payments continue to the longer of the life of the annuitant or the selected certain
period. Payments are made to a named beneficiary if the annuitant dies before the
expiry of the selected period
✔✔Minimum guaranteed death benefit (VLI) - ✔✔the initial face amount of a variable
life policy that is guaranteed to be paid to a named beneficiary so long as the scheduled
premiums are paid regardless of the performance of the separate account
✔✔Mortality guarantee - ✔✔a basic settlement option guarantee, which promises the
insurer will continue annuitized payments for as long as the annuitant(s) live, even
beyond mortality data life expectancy
, ✔✔nonforfeiture guarantee - ✔✔an annuity and cash value life insurance guarantee
that the contract owner will not lose the surrender value of the contract should they stop
making payments prior to annuitization or death
✔✔Prospectus - ✔✔a detailed summary of the SEC registration statement for a
security, which must be provided to the prospect for any variable product sale. An agent
is required to provide this material prior to, or concurrently with, any sales presentation
✔✔refund option - ✔✔an insurance or annuity settlement option in which payments
continue to the longer of the life of the annuitant or until the original principal is paid out.
The payments are continued to a named beneficiary. Otherwise, a lump sum payment
of any remaining balance is made to the beneficiary at he annuitant's death
✔✔separate account - ✔✔the account containing the investments supporting any
variable annuity or variable life insurance contracts of an insurer. This account is
segregated by federal securities law from the other assets, such as the general account,
of the insurer
✔✔Single payment deferred annuity (SPDA) - ✔✔a deferred annuity created with a
single purchase payment
✔✔Subaccount - ✔✔an investment portfolio, often similar to a mutual fund, within a
separate account. The purchaser of a variable product may be offered a dozen or more
of these portfolios among which to direct their investments
✔✔Suitability requirement - ✔✔an NASD principle requiring the agent in a variable
products presentation to make a conscientious inquiry into the prospect's insurance
product needs, financial circumstances, objectives and investment attitudes before
consummating the sale
✔✔Target (guideline) premiums - ✔✔With flexible premium products (UL and VUL), this
is the premium calculated by the insurer's actuaries, which will maintain the death
benefit for the entire life of the insured
✔✔Tax-sheltered Annuity (TSA) - ✔✔An annuity used in an IRS-qualified retirement
plan, such as the "403(b) Plan" for the employees of public schools, public hospitals,
church organizations and other not-for-profit organizations. In such a plan, both
employer and employee contributions are made on a pre-tax basis and accumulate tax-
deferred. All withdrawals are then taxed as ordinary income
✔✔Universal life insurance - ✔✔A type of life insurance characterized by flexible
premiums, an adjustable death benefit and cash values, which may be accumulated on
either a fixed or variable basis. Mortality charges will be based on annual term.
Contracts may allow loans, partial withdrawals, or both
WITH ANSWERS GRADED A+
✔✔immediate annuity - ✔✔An annuity, purchased with a single premium payment, in
which annuity payments begin the next period (one month to one year) after purchase
✔✔income - ✔✔An investment objective that focuses on dividends and interest to
produce income rather than capital appreciation
✔✔Indirect method - ✔✔an approach to managing a variable products separate
account that uses a unit investment trust contract with an investment company external
to the insurer
✔✔interest-only option - ✔✔An insurance or annuity settlement option in which the
insurer holds the principal and pays interest to the beneficiary with a guaranteed
minimum rate
✔✔Investment Company Act of 1940 - ✔✔A federal statute requiring insurer separate
accounts to be registered as investment companies with the securities industry
✔✔Investment management fee - ✔✔with a variable life insurance or variable annuity
contract, this is the amount paid to an investment advisor for providing professional
investment advice for an insurer separate account
✔✔Joint Life Income - ✔✔an insurance or annuity settlement option in which payments
continue for as long as either of two annuitants are living
✔✔Life income - ✔✔an insurance or annuity settlement option in which payments are
based on mortality and interest calculations and continue for as long as the annuitant
lives
✔✔Life income with period certain - ✔✔An insurance and annuity settlement option in
which payments continue to the longer of the life of the annuitant or the selected certain
period. Payments are made to a named beneficiary if the annuitant dies before the
expiry of the selected period
✔✔Minimum guaranteed death benefit (VLI) - ✔✔the initial face amount of a variable
life policy that is guaranteed to be paid to a named beneficiary so long as the scheduled
premiums are paid regardless of the performance of the separate account
✔✔Mortality guarantee - ✔✔a basic settlement option guarantee, which promises the
insurer will continue annuitized payments for as long as the annuitant(s) live, even
beyond mortality data life expectancy
, ✔✔nonforfeiture guarantee - ✔✔an annuity and cash value life insurance guarantee
that the contract owner will not lose the surrender value of the contract should they stop
making payments prior to annuitization or death
✔✔Prospectus - ✔✔a detailed summary of the SEC registration statement for a
security, which must be provided to the prospect for any variable product sale. An agent
is required to provide this material prior to, or concurrently with, any sales presentation
✔✔refund option - ✔✔an insurance or annuity settlement option in which payments
continue to the longer of the life of the annuitant or until the original principal is paid out.
The payments are continued to a named beneficiary. Otherwise, a lump sum payment
of any remaining balance is made to the beneficiary at he annuitant's death
✔✔separate account - ✔✔the account containing the investments supporting any
variable annuity or variable life insurance contracts of an insurer. This account is
segregated by federal securities law from the other assets, such as the general account,
of the insurer
✔✔Single payment deferred annuity (SPDA) - ✔✔a deferred annuity created with a
single purchase payment
✔✔Subaccount - ✔✔an investment portfolio, often similar to a mutual fund, within a
separate account. The purchaser of a variable product may be offered a dozen or more
of these portfolios among which to direct their investments
✔✔Suitability requirement - ✔✔an NASD principle requiring the agent in a variable
products presentation to make a conscientious inquiry into the prospect's insurance
product needs, financial circumstances, objectives and investment attitudes before
consummating the sale
✔✔Target (guideline) premiums - ✔✔With flexible premium products (UL and VUL), this
is the premium calculated by the insurer's actuaries, which will maintain the death
benefit for the entire life of the insured
✔✔Tax-sheltered Annuity (TSA) - ✔✔An annuity used in an IRS-qualified retirement
plan, such as the "403(b) Plan" for the employees of public schools, public hospitals,
church organizations and other not-for-profit organizations. In such a plan, both
employer and employee contributions are made on a pre-tax basis and accumulate tax-
deferred. All withdrawals are then taxed as ordinary income
✔✔Universal life insurance - ✔✔A type of life insurance characterized by flexible
premiums, an adjustable death benefit and cash values, which may be accumulated on
either a fixed or variable basis. Mortality charges will be based on annual term.
Contracts may allow loans, partial withdrawals, or both
