Question

11. John purchased a variable annuity with a premium deposit of $30,000. He allocated these funds equally among three of the contract's investment options: a domestic stock account fund, a long-term bond account fund, and the fixed account fund. How much of John's original investment will the insurer guarantee?
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• a. $10,000
• b. $20,000
• c. $30,000
• d. $0

· 12. With respect to the current interest rates that are declared and credited to traditional fixed annuities, which of the following statements is true?
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• a. These rates are mandated by state insurance commissions.
• b. These rates are a function of the performance of independent market indexes.
• c. These rates are left to the discretion of the issuing insurance company.
• d. These rates are selected by the annuity owners, within ranges specified by state law.

Answer 1

11) The insurer will guarantee the investment of $20,000.

This excludes the investment in equity account since the return on equity is uncertain and also it doesn't guarantee you any return like the long term bond or the fixed account.

Option b is correct

12) here option C is correct as the insurance company decides on the rates