When a Retained Asset Account Is Established in the Place

question 229

Multiple Choice

When a retained asset account is established in the place of a cash settlement, an interest bearing account is created by the insurer for the beneficiary. The beneficiary receives a checkbook with which to draw upon funds in the new account. The account holder can make:

• A) Partial or total withdrawal of the account balance as needed and has total control over the account
• B) Partial withdrawal of the account balance as needed and has total control over the account
• C) Total withdrawal of the account balance as needed and has total control over the account
• D) 25% withdrawal of the account balance as needed and has total control over the account.

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Definitions:

Annual Interest Rate

The annual interest rate is the percentage of principal charged by the lender for the use of its money over one year.

Down Payment

An initial upfront partial payment for the purchase of expensive items/services such as a home or a car.

Annual Payments

Payments made once a year, often related to loans, leases, or insurance policies.

Lease

A contractual agreement where one party, the lessor, grants another party, the lessee, the right to use an asset for a specified period in exchange for payments.