5 Questions
- When a customer chooses to annuitize a variable annuity, all of the following are factors the insurance company will use in calculating the initial payout amount except
A. age of the annuitant
B. sex of the annuitant
C. balance of the separate account
D. historic inflation
historic inflation
- The investment return of a variable annuity comes from
A. the performance of the selected subaccounts within the separate account
B. the assumed rate stated in the policy documents
C. computing the excess of the premiums received over the mortality experience
D. the insurance company's general account
the performance of the selected subaccounts within the separate account
- The decision to annuitize a variable or fixed annuity may be reversed within how many days of election?
A. 30 days
B. 7 days
C. 0 days
D. 90 days
0 days
- Which of the following would be a suitable objective for recommending a variable annuity?
A. Saving for college education
B. Supplemental retirement savings
C. Primary retirement savings
D. Saving for a down payment
Supplemental retirement savings
- When is growth within a variable annuity taxed?
A. At withdrawal
B. Annually
C. After age 59½
D. At retirement
At withdrawal
Study Notes
Variable Annuities
- When calculating the initial payout amount, the insurance company considers the age and sex of the annuitant, as well as the balance of the separate account, but not historic inflation.
Investment Return
- The investment return of a variable annuity comes from the performance of the selected subaccounts within the separate account.
Annuitization
- The decision to annuitize a variable or fixed annuity can be reversed within 30 days of election.
Objectives for Recommending a Variable Annuity
- Suitable objectives for recommending a variable annuity include supplemental retirement savings and possibly primary retirement savings, but not saving for college education or a down payment.
Taxation of Growth
- Growth within a variable annuity is taxed at withdrawal.
Test your knowledge on factors used by insurance companies when calculating the initial payout amount for variable annuity annuitization. Identify which factor is not considered in the calculation.
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