Question

I need help on questions 8,9,10 please!!

B. For an indexed annuity, what is credited to the contract at the end of each interest crediting term? a. the index interest rate b. the minimum guaranteed interest rate c. the index interest rate or the minimum guaranteed interest rate, whichever is greater d. the index interest rate or the minimum guaranteed interest rate, whichever is less 9. Darcy owns an indexed annuity. The index that supports her annuity was at 1000 when the contract's interest crediting period began and 1200 when the crediting period ended. What is the index increase? a. 10 percent b. 20 percent c. 40 percent d. 200 percent 10. With regard to the investment of a fixed annuity's assets, which of the following statements is true? a Premiums are invested into the insurer's separate account. b. Premiums are directed into the insurer's general account c. Premiums are invested at the owner's option into either secure bond or fixed interest accounts. d. Premiums are directed at the owner's option into either government-issued Treasury bills or money market accounts.

Answer 1

8 Ans - c The Index Interest Rate or The Minimum Guarantees Interest Rate whichever is Greater.

Index Annuity returns are linked to some specific equity based index. So return are based on the performance of the Index however as Index guarantee a minimum returns if benchmark returns are negative so the option will credit maximum of guaranteed returns or Index gain whichever is high hence option C is correct. As Option C is correct hence all other option is incorrect no further explanation required on each options.

9 Ans - b 20 percent

Index Price at the Beginning - 1000

Index Price at the End - 1200

Returns = 200/1000 = 20%

As option B is correct hence all other options are incorrect.

10 Ans - b Premiums are directed into the insurer's general accounts.

The Premiums are directed into the insurer's general accounts and than it is invested into fixed income securities like secure bonds and fixed income accounts. As option B is correct hence all other options are incorrect.

Hope this helps, feel free to share your feedback. Thanks and have a good day.

Answer 2

Gracie owns a deferred annuity. The contract is tied to a market index, which was at 1000 when Gracie purchased the product and reached 1250 five years later at the end of the contract's crediting term. The 25 percent index gain is the basis for the amount of interest credited to the contract. What kind of annuity does Gracie own?