DC DC Annuities and Retirement Insurance Products 1

Question 1

A DC resident purchases an annuity that begins making income payments immediately after a lump-sum premium is paid. This is called a(n):

Accepted Answer

Immediate annuity

Answer

An immediate annuity converts a lump-sum payment into an income stream that begins within one payment period (usually within a year) of the single premium payment.

Question 2

Under DC insurance regulations, annuity contracts sold by insurers must include a free-look period of at least:

Accepted Answer

10 days

Answer

DC requires a minimum 10-day free-look period for annuity contracts, allowing purchasers to return the contract for a full refund.

Question 3

A DC variable annuity's 'separate account' is best described as:

Accepted Answer

An investment account where the premium is invested in sub-accounts such as mutual fund-like portfolios, with returns tied to market performance

Answer

The separate account in a variable annuity holds the policyholder's funds in investment sub-accounts, and the contract value fluctuates based on the performance of those investments.

Question 4

In DC, an annuity agent selling variable annuity products is required to hold which type of license in addition to a life insurance license?

Accepted Answer

A FINRA securities license (Series 6 or 7) and applicable state variable products license

Answer

Because variable annuities are securities, agents must hold appropriate FINRA securities registrations (Series 6 or 7) in addition to their state insurance license.

Question 5

A DC fixed annuity contract guarantees the contract owner:

Accepted Answer

A minimum guaranteed interest rate and principal protection

Answer

Fixed annuities credit a set guaranteed interest rate and protect the principal from market losses, offering predictable, stable growth.

DC - District of Columbia Insurance Practice Test

DC - District of Columbia Insurance Practice Test

DC DC Annuities and Retirement Insurance Products 1