LOUISIANA LIFE, HEALTH, AND ACCIDENT INSURANCE EXAM TEST BANK 300 QUESTIONS AND ANSWERS|AGRADE
An insurance company forwards fixed annuity premiums to their
general account, where the money is invested. The guaranteed
minimum interest is set at 3%. During an economic downswing, the
investments only drew 2.5%. What interest rate will the insurer pay to
its policyholders?
(Choose from the following options)
1. 3% this payment. The overpayment this time will be subtracted from
the next time the rate exceeds 3%.
2. 3% regardless of what the investment draws since that's the
guaranteed rate
3. 2.5%
4. 3% - ANSWER-3%
Insurance companies promise guaranteed minimums on the fixed
annuities (3% in this scenario). This means that if the investments draw
less than 3%, the company will have to pay 3% anyway. If the
investments earn over 3%, the company will pay that excess.
In long-term care (LTC) policies, as the benefit period lengthens, the
premium
(Choose from the following options)
1. LTC premiums are not based on benefit periods.
2. Decreases.
3. Increases.
4. Remains unchanged. - ANSWER-Increases.
LTC policies define the benefit period for how long coverage applies,
after the elimination period. The longer the benefit period, the higher
the premium will be.
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