SIE: Chapters 8 & 9

Contributions to a 529 plan are generally made in the form of:

Cash Contributions to a 529 plan may only be made in the form of cash and are subject to the annual gift tax exclusion (i.e., $15,000 per year or $75,000 spread over five years avoids gift tax).

Variable annuities typically assess which of the following types of sales charge?

Contingent deferred sales charge Variable annuities assess a sales charge at the time of redemption, which is also referred to as a surrender or withdrawal charge. These charges are also considered a form of contingent deferred sales charge (CDSC) since the charges typically diminish the longer the person holds the annuity.

According to the SEC, which of the following is NOT considered a security?

Equity-indexed annuities Variable annuities, as well as both 529 and 529A plans, are considered securities by the SEC. However, although equity-indexed annuities combine the features of both fixed and variable annuities, they're not considered securities by the SEC.

Which of the following oil and gas partnerships is considered the MOST conservative?

Income An oil and gas income program invests in producing wells, which generally providing a steady stream of income to investors. Income programs are considered the least risky and most conservative of the oil and gas programs.

With a 1035 Exchange, all of the following are a concern, EXCEPT: Paying taxes on the exchange to the new annuity The loss of existing benefits Starting a new surrender period Incurring a surrender charge on the original annuity

Paying taxes on the exchange to the new annuity The IRS allows a 1035 Exchange of one annuity for another without creating a taxable event. However, the exchange may result in a surrender charge on the original annuity, a new surrender period on the new annuity, and the loss of existing benefits on the original annuity.

When a limited partnership is dissolved, what is the priority of dissolution from first to last?

Secured creditor, general creditor, limited partner, general partner

The account that determines the value of a variable annuity is referred to as the:

Separate account The account that determines the value of a variable annuity is the separate account. The annuitant directs his contributions to the separate account and then the funds are distributed into various subaccounts of the separate account. In a variable annuity, the annuitant assumes the investment risk in the separate account.

An individual purchased a variable annuity, but passed away during the accumulation period. At the time of death, if the value of the annuity is less than the amount invested, a beneficiary is entitled to:

The amount invested in the annuity. Although variable annuities are not life insurance policies, they do offer a death benefit. The death benefit is the greater of the amount invested or the value of the annuity at the time of death. In this question, since the amount invested is greater than the value of the annuity at the time of death, this is the amount to which the beneficiary is entitled.

In a variable annuity, the size of the first monthly payment is based on all of the following criteria, EXCEPT:

The health of the annuitant The age and gender of the annuitant, the account value, and the chosen settlement option are all factors in determining the amount of the first monthly payment for a variable annuity. However, the individual's health is not a factor.

A city has established a local government investment pool (LGIP). This allows investment by which of the following entities?

The state, county, and city only Local government investment pools (LGIPs) offer municipal governments a liquid investment which provides safety of principal. However, these products are not open to the public.

An annuitant has annuitized his variable annuity and dies before the value of the units have been paid out. If the primary beneficiary receives the remaining value, what payout option was selected by the annuitant?

Unit refund life annuity Upon the death of the annuitant, the unit refund life annuity option continues to pay the beneficiary up to the predetermined annuity amount. A period certain payout is only for the remainder of a preset period. With a straight life payout, payments cease upon the annuitant's death. Lastly, there's no such thing as a predetermined payment option

A registered representative has submitted a completed application for the purchase of a variable annuity along with a check from the customer. How long does the broker-dealer have to determine whether the purchase is suitable for the customer?

seven business days After receiving a completed application and a check for the purchase of a variable annuity, a broker-dealer has up to seven business days to determine whether the purchase is suitable for the customer.