Series 65 - Unit 15

On July 15, 2015, your client purchased a variable life insurance policy with a death benefit of $500,000. The November 2017 statement showed a cash value of $30,000. If the client wanted to borrow as much as possible, the insurance company would have to allow a loan of at least

$0

A 30-year old client indicates that he needs $500,000 of life insurance coverage for the next 20 years. The lowest out-of-pocket cost would be if he purchased a

20-year level term policy

Insurance companies selling annuities offer a variety of purchase options to owners. Which of the following definitions regarding these annuity options is NOT true?

Accumulation annuity - an annuity that allows the investor to accumulate funds in a separate account before investment in an annuity

Peter and Connie are thinking about selecting a settlement option for their variable annuity. If their objective is to have the annuity provide income until both of them are deceased, which of the following settlement options will best meet their needs?

Joint and survivor annuity

An annuity contract owner, age 45, surrenders the annuity to buy a home. Which of the following best describes the tax consequences of this action?

Ordinary income taxes and a 10% early withdrawal penalty will apply to the amount of the withdrawal that represents earnings; there will be no tax on the cost basis.

Which of the following types of annuity settlement options provides a lifetime income to the annuitant regardless of how long he lives and the highest monthly payment amount?

Straight life annuity

Which of the following is indicative of the primary difference between variable life insurance and straight whole life insurance?

Way in which the cash values are invested

The key difference between a variable annuity and a fixed annuity is that the fixed annuity

offers a guaranteed return

After the death of the annuitant, beneficiaries under a life an 15-year period certain option are subject to

ordinary income taxation on the amount of the payout that exceeds the cost basis based on the exclusion ratio

When comparing mutual funds and variable annuities, it would be correct to state that

the expense ratio of the variable annuity is usually higher than that of a comparable mutual fund

All of the following are advantages of universal life insurance EXCEPT

the policy is guaranteed never to lapse