Series 6 Ch 10
Retail Broker-Dealer ABC wants to sell a certain variable annuity contract to a customer. Principal underwriter Broker-Dealer DEF is the distributor of the contracts for the insurance company. What are the FINRA requirements for ABC to be able to buy the contract from DEF at a discount from the public offering price and sell the contract to its customer at the public offering price?
Both firms must be members of FINRA and there must be a written sales agreement between them.
A surrender value is common to which of the following types of variable annuities?
A single-payment deferred annuity A periodic or multiple payment deferred annuity
An annuity unit of a variable annuity contract is most similar to which one of the following?
Mutual fund shares
Which of the following is TRUE regarding the variable universal life policy?
Premiums and death benefits may fluctuate.
The offering of which of the following securities would NOT be subject to the prospectus delivery requirements?
Secondary Closed-End Fund Share Purchases
Variable Annuities and sales persons must be registered with or under:
State Insurance Department, SEC, Investment Company Act of 1940, FINRA
During the accumulation phase of a variable annuity, which is true?
The account is tax deferred
An investor has a long-term investment objective. Of the following, which is the best reason that a variable annuity may meet the investor's objective?
The individual's investment will be negatively affected to a significant degree by surrender charges.
Who receives an annuity contract's surrender value?
The owner of the contract receives the surrender value.
If a variable annuity contract payment is annuitized, which of the following is true?
The value of the accumulation units is used to determine the number of annuity units.
Which of the following would probably provide the greatest protection of purchasing power?
Variable annuity
Several years ago, a client had a few investment options and the decision was made that the client would invest in a non-qualified variable annuity. How are contributions to this type of investment product treated for tax purposes?
When the contributions are withdrawn, the amount withdrawn will not be subject to taxation.
The Statement of Additional Information must be delivered
at the request of a client or prospective client
Variable annuities do not have
guaranteed cash value
A variable annuity's separate account may be referred to as all of the following in sales literature EXCEPT:
mutual fund
The appreciation of the value of a variable annuity during the accumulation period is
tax deferred until annuitization.
One of your clients is a 65 year-old male. Several years ago, this client purchased a variable annuity for $40,000 that is currently worth $60,000. The client decides to make a single, one-time withdrawal of $9,000 to pay off a credit card and take a cruise with his wife. The tax implications of this withdrawal are:
that since a LIFO accounting method is used on such annuities, the withdrawal in its entirety is taxable.
When investing in Variable Annuities
the investor carries the investment risk, and could incur a loss if the value of the portfolio declines
