PSI Ohio Insurance Practice Exam

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Study for the PSI Ohio Insurance Test. Use flashcards and multiple choice questions with explanations. Get ready to ace your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Which of the following statements is TRUE for a flexible premium annuity?

The purchaser can only pay a fixed amount
The purchaser has the option to vary the amount of each premium payment
The annuity provides guaranteed fixed returns
The annuity is not subject to market fluctuations

The correct answer is: The purchaser has the option to vary the amount of each premium payment

A flexible premium annuity allows the purchaser the option to vary the amount of each premium payment. This flexibility means that the policyholder can choose to pay different amounts at different times, which is particularly advantageous for individuals whose incomes may fluctuate or who want to invest variable amounts based on their financial situation. In contrast, a fixed amount payment system restricts contributions to set amounts at predetermined intervals, limiting the flexibility that many investors need or desire. Additionally, while some annuities may provide guaranteed fixed returns, this characteristic does not apply universally to flexible premium annuities, as they can also be linked to market performance, which introduces variable returns. Therefore, the assertion regarding fixed returns is not inherently true for all flexible premium annuities. Similarly, while some investments may have protections against market fluctuations, flexible premium annuities can also be exposed to market performance depending on their structure. This combination of features makes option B the true statement regarding flexible premium annuities.