In the Case of a Refund Annuity

question 43

Multiple Choice

In the case of a refund annuity:

• A)the monthly income provided by the policy varies as a function of the insurer's actual investment experience.
• B)the insurance company agrees to pay a guaranteed rate of interest on the insured's money.
• C)a specified monthly income is provided for a stated number of years without consideration of any life contingency.
• D)if the annuitant dies, the designated beneficiary receives monthly payments until the total price of the annuity is paid back.
• E)the insurance company guarantees the annuitant a stated amount of monthly income for life.

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to the variance in the volume of production.

Fixed Component

A cost or part of a cost that remains unchanged regardless of changes in the level of output or activity.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity measure, like labor hours or machine hours.

Machine-Hours

A measure of production activity that quantifies the number of hours machines are operated in the production process.