Question

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1. when geneva purchased her variable annuity, she directed $500 of her initial premium into the products subaccount a. the unit value at the time of her purchase was $10. how many subaccount a units did geneva acquire?

○a. 5
○b. 50
○c. 500
○d. 5,000

1. which of the following is a distinguishing feature between fixed and variable annuities?

○a. fixed annuities can only be funded with the payment of a single premium.
○b. only variable annuities provide for annuitization.
○c. fixed annuities allow owners to direct their premium payments into stock and bond accounts.
○d. variable annuity principal and earnings are not guaranteed by the insurer

1. felipe owns an annuity that credits a rate of interest that is based on annual percentage changes in the s&p 500. if the index change is positive, the insurer will credit 90 percent of the percentage change to his contract for that year; if the index change is negative, the insurer will credit zero percent to the contract for that year. what kind of annuity does felipe own?

Explanation:

Step1: Calculate units for Q4

To find the number of units, divide the total premium by the unit value:
$\text{Number of units} = \frac{\text{Total premium}}{\text{Unit value}} = \frac{500}{10} = 50$

Step2: Analyze Q5 options

• a: Fixed annuities accept multiple premiums, so false.
• b: Both fixed and variable annuities offer annuitization, so false.
• c: Only variable annuities let owners direct premiums to stock/bond accounts, so false.
• d: Fixed annuities guarantee principal/earnings; variable ones do not, so true.

Step3: Identify annuity type for Q6

This annuity ties interest to an index (S&P 500), caps negative returns at 0, and uses a participation rate (90% of positive index change) — this matches the definition of an indexed annuity.

Answer:

1. b. 50
2. d. Variable annuity principal and earnings are not guaranteed by the insurer
3. Indexed annuity (also called equity-indexed annuity)