View Full Version : FINAL course 5 MC answers out
12-17-2001, 04:16 PM
See the website.
Anyone care to comment on question #40 of the MC: How is an "Equity Indexed Annuity" a fixed accumulation annuity? I would call it a variable accumulation annuity, since they are tied to a stock or mutual fund, and therefore have fluctuation yearly returns.
12-17-2001, 07:08 PM
Although your logic makes sense, the major distinguishing feature between variable and fixed annuities is where the money is held. VA money is in a separate account; FA money is in the general account. EIAs are held in the general account and not registered with the SEC (unlike VAs)...so EIAs are considered to be fixed annuities.
12-18-2001, 09:39 AM
Equity Indexed Annuities have a guaranteed rate of interest like 3% or so. The fact that there is no risk of loss of principal, makes it a fixed annuity. Doesn't that also avoid SEC registration?
12-18-2001, 10:50 AM
Don't use logic. The book said that they were fixed annuities. Therefore, they are fixed annuities.
12-18-2001, 11:03 AM
The textbook said it was a fixed annuity, the Jam said it was a Hybrid.
Point made: Make sure you read and outline and make notes in the Jam. I have a strong feeling that us writing the exams are not the only ones using the Jam. What do you think?
12-18-2001, 11:20 AM
This is a good example of the difference of the general English usage of a word and its insurance usage. Why do we consider a fixed accumulation annuity "fixed" if the company can vary the credited rate (subject to minimums)?
CallMeCrazy and A2 are right about the distinction between the two. Additionally, your agents don't have to be licensed to sell securities in order to sell equity-indexed products, which is a big hurdle to get into variable products.
12-19-2001, 09:59 AM
Does anyone have a copy of the PRELIMINARY MC answers? I am wondering how many were changed.
4 answers were changed:
#7 was A
#11 was E
#20 was B
#34 was B only
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