Annuity exam
An annuitant-driven contract is one in which A) the annuitant is the same as the beneficiary B) only the annuitant may make premium deposits C) the annuitant is the same as the contract owner D) annuitization is required
A
Jane owns a fixed deferred annuity contract that she purchased 10 years ago with a single premium of $30,000. The contract has a 7-year surrender charge period, assessing a 4% charge against the accumulated account balance. The contract value today is $55,000. If Jane decides to cancel her contract for its surrender cash value before the annuity starting date, what will be the cash surrender value of her contract today? A) $52,800 B) $55,000 C) $28,000 D) $30,000
A
At death, a deferred annuity owner's estate is subject to A) capital gains taxation on the deceased owner's basis B) income taxation on the income in respect of a decedent (IRD), which is the annuity value in excess of the deceased owner's basis. C) no taxation D) income taxation on the deceased owner's basis
A) capital gains taxation on the deceased owner's basis
Jack and Louise currently receive $600 per month from their annuity contract under a joint and 50% survivor annuity payout option. If Jack were to die today, which of the following statements would be CORRECT? A) Louise would continue receiving monthly benefits of $200 B) Louise would continue receiving monthly benefits of $300 C) Annuity payments would terminate D) Louise would continue receiving monthly benefits of $900
B) Louise would continue receiving monthly benefits of $300
For buyers under age 60, the minimum free-look period for deferred annuities sold in California is A) 20 days B) 10 days C) 90 days D) 45 days
C) 90 days
All of the following are valid reasons that could support the recommendation to purchase a deferred annuity EXCEPT A) tax-deferred accumulation B) guaranteed income stream if annuitized C) stepped-up basis to the beneficiary at the owner's death D) purchase can be made with either a single premium or periodic premiums
C
The basic purpose of the California Life and Health Insurance Guarantee Association is to A) penalize insurance companies that are financially impaired and insolvent B) allow insurance companies to credit the highest interest rate possible on their life insurance and annuity contracts C) provide coverage for owners of individual life, health, and annuity contracts in the event of the issuing insurance company's impairment or insolvency D) penalize owners of individual life, health, and annuity contracts in the event of the issuing insurance company's impairment or insolvency
C) provide coverage for owners of individual life, health, and annuity contracts in the event of the issuing insurance company's impairment or insolvency
Which of the following is generally NOT a suitable use for an annuity? A) Providing an income in retirement that is guaranteed to remain level for life B) Accumulating a sum of money on a tax-deferred basis until it is needed for retirement C) Converting a lump-sum amount of money into a periodic stream of income for life D) Passing on wealth to heirs
D) Passing on wealth to heirs
All of the following statements regarding the free-look provision of a deferred annuity contract sold in California are correct EXCEPT A) unless overridden by the buyer, premiums paid by a senior age 60 or older to purchase a variable annuity must be invested in a fixed interest account during the free-look period B) for buyers age 60 and older, the minimum free-look period is 30 days C) the free-look period begins on the date the contract is delivered to the buyer D) the amount returned to the buyer requesting the return an annuity contract during the free-look period is the premium minus the contract surrender charge
D) the amount returned to the buyer requesting the return an annuity contract during the free-look period is the premium minus the contract surrender charge
