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Questions and Answers
In order for the next variable annuity income benefit payment to increase from the previous one received, which of the following must occur?
In order for the next variable annuity income benefit payment to increase from the previous one received, which of the following must occur?
Which annuity is the only one regulated by the SEC, FINRA, and State insurance departments?
Which annuity is the only one regulated by the SEC, FINRA, and State insurance departments?
Variable
Before taking an application for an annuity, what is important to determine?
Before taking an application for an annuity, what is important to determine?
The suitability of the product to the intended purchaser
When dealing with seniors, producers must retain a copy of the Pre-Meeting (Scope of Appointment) Notice in their files for a minimum of how many years?
When dealing with seniors, producers must retain a copy of the Pre-Meeting (Scope of Appointment) Notice in their files for a minimum of how many years?
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What option has Jasmine selected if she deposited $100,000 into a single premium immediate annuity and the balance is paid to her sister if she dies before receiving $100,000 in payments?
What option has Jasmine selected if she deposited $100,000 into a single premium immediate annuity and the balance is paid to her sister if she dies before receiving $100,000 in payments?
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What document must a Variable Annuity be sold with?
What document must a Variable Annuity be sold with?
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Which of the following death benefits is paid out to the beneficiary income tax free?
Which of the following death benefits is paid out to the beneficiary income tax free?
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If an annuity lifetime benefit is selected in most cases, it is an _________ election.
If an annuity lifetime benefit is selected in most cases, it is an _________ election.
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What do both life insurance and annuities have in common?
What do both life insurance and annuities have in common?
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Surrender charges typically ____________ over time.
Surrender charges typically ____________ over time.
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Values and benefits of Indexed Annuities may decrease.
Values and benefits of Indexed Annuities may decrease.
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Under which plan can an annuity be funded up to the limits set by the insurer rather than by the IRS?
Under which plan can an annuity be funded up to the limits set by the insurer rather than by the IRS?
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What is the term for the annuity product featuring fixed interest rate guarantees, combined with an interest rate adjustment factor that can cause the surrender value to fluctuate?
What is the term for the annuity product featuring fixed interest rate guarantees, combined with an interest rate adjustment factor that can cause the surrender value to fluctuate?
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Study Notes
Variable Annuity Income Payments
- Next variable annuity income payment increases if the separate account's actual performance exceeds the policy's assumed interest rate.
Regulation of Annuities
- Only variable annuities are regulated by the SEC, FINRA, and State insurance departments.
Suitability of Annuity Products
- Determining the suitability of an annuity product for the intended purchaser is essential before taking an application.
Record Keeping for Seniors
- Producers must retain a copy of the Pre-Meeting (Scope of Appointment) Notice for a minimum of 5 years when dealing with seniors.
Jasmine's Annuity Option
- Jasmine selected the Life Income with Refund Option, which provides that her unreceived payment balance will be refunded to her sister if she dies before receiving $100,000.
Selling Variable Annuities
- Variable Annuities must be sold with a prospectus, which details fees, charges, expenses, and risks.
Death Benefits and Taxation
- Life insurance pays out an income tax-free death benefit, unlike annuities where tax-deferred earnings are taxable when paid out.
Lifetime Benefit Elections
- Selecting an annuity lifetime benefit is typically an irrevocable election.
Mortality Tables
- Both life insurance and annuities are based on mortality tables. Annuities are primarily for supplementing retirement income, while life insurance provides funds upon the insured's death.
Surrender Charges
- Surrender charges decrease over time and eventually vanish, aligning cash value with cash surrender value.
Indexed Annuities
- Indexed Annuities can have increasing values and benefits; however, they will not decrease even if the benchmark index drops.
Funding Annuities
- Nonqualified annuities can be funded based on insurer-set limits rather than IRS limits, allowing more flexibility in contributions.
Market-Value Adjustment Annuities
- Market Value Adjustment Annuities feature fixed interest rate guarantees combined with an adjustment factor, leading to potential fluctuations in surrender value based on market conditions.
Studying That Suits You
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Description
Test your knowledge on variable annuities with this quiz focused on Chapter 5. Explore key concepts such as benefit payment structures and investment performance comparisons. Perfect for those studying finance or insurance.
