Annuities Are an Important Product Sold by Life Insurance Companies

question 116

Multiple Choice

Annuities are an important product sold by life insurance companies.Which of the following statements is correct as of 2015?

• A)Life insurance contracts continue to dominate premiums written while annuities are of less importance.
• B)The value of annuity sales are more than double those of traditional life insurance lines.
• C)Retirement accounts and private pension plans are not allowed access to the annuities of life insurance companies.
• D)The funds in an annuity can only be invested in guaranteed investment contracts (GICs).
• E)All annuities are listed as separate accounts business on the life insurer's balance sheet.

---

Definitions:

Direct Cost

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and labor.

Indirect Cost

Costs associated with operations that cannot be directly linked to a specific product, service, or project (e.g., utilities, rent, and managerial salaries).

Period Cost

Expenses not directly tied to the production of goods, thereby charged to the accounting period in which they occur.

Product Cost

Costs that are incurred to acquire or manufacture a product, including direct materials, direct labor, and manufacturing overhead.