MICHIGAN VARIABLE ANNUITIES EXAM SCRIPT 2025/2026
QUESTIONS WITH ANSWERS GRADED A+
✔✔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 the
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 Requirements - ✔✔an NASD principle requiring the agent in a variable
products representation 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 - ✔✔an annuity used in an IRS-qualified retirement plan, such
as a 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
✔✔Valuation - ✔✔for variable products, the valuation of the separate account must be
performed daily, except weekends and national holidays, and must be based on the mkt
value of the underlying securities in the account
✔✔variable annuity - ✔✔an annuity contact in which the account value is maintained in
a separate account in which portfolio choices are made by the owner of the annuity;
there is no minimum rate of return, and investment risk is retained by the annuity owner;
annuity payments from a variable annuity will vary according to the performance of the
separate account
, ✔✔Variable death benefit - ✔✔with fixed premium variable life insurance, this is an
additional death benefit, which may result from the positive performance of the separate
account, and which is paid to the beneficiary on the death of the insured n addition to
the Minimum Guaranteed Death Benefit
✔✔variable life insurance - ✔✔a permanent life insurance policy type where the cash
values are maintained in a separate account in which portfolio choices are made by the
own of the policy; there is no minimum rate of return, and investment risk is retained by
the policyowner; a minimum death benefit may be guaranteed if premiums are
maintained
✔✔difference between whole life and universal life - ✔✔Whole life and universal life
insurance are both types of permanent life insurance. Whole life insurance offers
consistent premiums and guaranteed cash value accumulation, while a universal policy
provides flexible premiums and death benefits. You can borrow against the cash value
of a whole or universal policy
✔✔flexible premium policies = - ✔✔variable universal life policy
✔✔scheduled premium policy = - ✔✔fixed premium policy OR variable life
✔✔exchange privilege for variable policies - ✔✔mandated by the SEC for 24 months
✔✔what is the max hypothetical rate of return (%) that sales illustrations may use for
variable products? - ✔✔12%
✔✔charges deducted from the premium include the following: - ✔✔-admin fees
-sales load (charge)
-state prem taxes
✔✔charges deducted from the separate account include the following: - ✔✔-mortality
expense (cost of insurance)
-expense risk fee
-investment mgt fee
✔✔ Other names for pure life settlement - ✔✔-life income
-life annuity
✔✔What annuity settlement option produces the largest monthly income guaranteed for
life? - ✔✔pure life settlement option
✔✔second life contingency option - ✔✔life with period certain (ie. 10 years) so even if
the annuitant does or does not die within that timeframe, insurer guarantees to continue
the annuity payments to a named beneficiary for the balance of the certain period.
QUESTIONS WITH ANSWERS GRADED A+
✔✔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 the
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 Requirements - ✔✔an NASD principle requiring the agent in a variable
products representation 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 - ✔✔an annuity used in an IRS-qualified retirement plan, such
as a 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
✔✔Valuation - ✔✔for variable products, the valuation of the separate account must be
performed daily, except weekends and national holidays, and must be based on the mkt
value of the underlying securities in the account
✔✔variable annuity - ✔✔an annuity contact in which the account value is maintained in
a separate account in which portfolio choices are made by the owner of the annuity;
there is no minimum rate of return, and investment risk is retained by the annuity owner;
annuity payments from a variable annuity will vary according to the performance of the
separate account
, ✔✔Variable death benefit - ✔✔with fixed premium variable life insurance, this is an
additional death benefit, which may result from the positive performance of the separate
account, and which is paid to the beneficiary on the death of the insured n addition to
the Minimum Guaranteed Death Benefit
✔✔variable life insurance - ✔✔a permanent life insurance policy type where the cash
values are maintained in a separate account in which portfolio choices are made by the
own of the policy; there is no minimum rate of return, and investment risk is retained by
the policyowner; a minimum death benefit may be guaranteed if premiums are
maintained
✔✔difference between whole life and universal life - ✔✔Whole life and universal life
insurance are both types of permanent life insurance. Whole life insurance offers
consistent premiums and guaranteed cash value accumulation, while a universal policy
provides flexible premiums and death benefits. You can borrow against the cash value
of a whole or universal policy
✔✔flexible premium policies = - ✔✔variable universal life policy
✔✔scheduled premium policy = - ✔✔fixed premium policy OR variable life
✔✔exchange privilege for variable policies - ✔✔mandated by the SEC for 24 months
✔✔what is the max hypothetical rate of return (%) that sales illustrations may use for
variable products? - ✔✔12%
✔✔charges deducted from the premium include the following: - ✔✔-admin fees
-sales load (charge)
-state prem taxes
✔✔charges deducted from the separate account include the following: - ✔✔-mortality
expense (cost of insurance)
-expense risk fee
-investment mgt fee
✔✔ Other names for pure life settlement - ✔✔-life income
-life annuity
✔✔What annuity settlement option produces the largest monthly income guaranteed for
life? - ✔✔pure life settlement option
✔✔second life contingency option - ✔✔life with period certain (ie. 10 years) so even if
the annuitant does or does not die within that timeframe, insurer guarantees to continue
the annuity payments to a named beneficiary for the balance of the certain period.
