NW Annuities Exam

A deferred annuity may be appropriate for all of the following clients, Except:

(A). Clients seeking short-term wealth accumulation. B. Clients who have maxed out contributions to IRA's and company-sponsored retirement plans. C. Clients who anticipate needing a guaranteed income source in retirement. D. Clients who want additional tax-deferred investment options. Not Sure!

Ian and Isabella are in their mid-fifties and would like to help their daughter with a down payment on a house. They want to withdraw a portion, or possibly surrender, Ian's entire non-qualified annuity in order to do so. Their rep. should explain to them that a withdrawal from Ian's annuity prior to age 591/2, would result in:

(A). Ordinary income tax, 10% IRS penalty applied to the entire withdrawal, and the applicable contractual charges. NOT SURE!!! B. Ordinary Income tax, a 10% IRS penalty applied to the earning withdrawn and any applicable contractual charges. C. An IRS audit. D. A and C only

Charles and Lorraine are in their mid-fifties and intend on retiring in ten years. They want to secure a fixed and guaranteed income streams that will last as long as either one is alive but are concerned about how the market and interest may affect their investments and potential income in the next ten years. As their rep., which Northwestern Mutual annuity may meet address their concerns?

(A). Single Premium Deferred Income Annuity. B. Flexible Premium Fixed Deferred Income Annuity C. Single Premium Variable Immediate Annuity D. Deferred Annuity with systematic withdrawals

A client who is ready to retire in the next six months and has the need for constant, stable income during retirement, yet has little risk tolerance when it comes to investing, would be best suited by which of the following annuities:

(A). Single Premium Immediate Annuity B. Deferred Fixed Annuity C. Single Premium Deferred Income Annuity D. Deferred Variable Annuity

Your client, Larry, would like to discuss the features and benefits available to him by investing in a deferred fixed annuity. As a financial rep, you should discuss all the following with Larry, EXCEPT:

(A). The deferred fixed annuity also offers various underlying sub-accounts, including several fixed income options. B. The interest rate for the deferred annuity is guaranteed for a stated period of time. C. A deferred annuity offers tax-deferred growth. D. Earnings distributions from a deferred annuity are taxed as ordinary income upon withdrawal.

The ------ is offered on Northwestern Mutual immediate annuities and income plans of a deferred annuity. The -------- is also, but neither is offered on the Single Premium Deferred Income Annuity.

(B). Increasing Payment Option/Accelerated Income Withdrawal Feature C. Single premium/Flexible premium A. Accelerated Income Withdrawal Feature/Accelerated Death Feature. A. Increasing Payment Option/Accelerated Death Benefit Feature.

Luke's client intends to retire in 15 years. A second financial goal the client has is to purchase a vacation home in 5 years. The client has heard good things from some friends about the subsidy of principle with deferred fixed annuities. Luke should caution the client against using a deferred annuity for the vacation home goal because of the short time horizon, while annuities are long-term investments, typically suited for retirement. In addition, he should inform the client that withdrawals prior to age 59 1/2 may incur an IRS penalty.

-(TRUE) NOT SURE!!! -False

Prior to recommending the purchase or exchange of a deferred annuity, a financial representative should make reasonable effort to obtain, at a minimum, information concerning the customer's: -age -investment experience, investment objectives, and risk tolerance -intended use of the deferred annuity, including the investment time horizon and liquidity needs. -financial situation, including annual income, tax status, liquid net worth, and existing assets (including investments and life insurance holdings).

-(True) -False

With a Northwestern Mutual's Select Fixed Annuity, withdrawal charges are waived if the annuitant/owner is confirmed to a nursing home, or terminally ill, as described in the contract.

-(True) -False

With a Single Premium Immediate Annuity, the payout is set and guaranteed by the insurance company issuing the contract.

-(True) -False

One benefit of a client owning a Northwestern Mutual Single Premium Deferred Income Annuity is ability to have some liquidity with the Accelerated Income Withdrawal Feature.

-True -(False)

The Select Bronze contract has a declared rate that is guaranteed for five years.

-True -(False)

Joe is meeting with a husband and wife whose financial goal is to bridge an income gap until their pensions begin in seven years. They want guaranteed income and would like it to remain constant over the seven years. Joe is preparing to recommend a SPIA to help them meet this goal. During his meeting to present the income plan options, Joe should suggest which of the following proposals:

A. A joint-life income plan since this will pay as long as either of them is alive. B. A single-life income plan with a seven year period certian, since it will pay the most while one of them is alive. C. A joint-life income plan with a 5 year period certain, since there is a significant chance both of them will pass away in the next five years. (D) A period certain income plan that would provide a fixed amount of the seven year period, with payments ending after the seventh year to coincide with the pension commencements.

In addition to having the option of taking systematic withdrawals, Northwestern Mutual's Select Fixed Annuity has options that allow clients to take a guaranteed fixed income plan that will last for:

A. A specified number of years. B. The rest of their life. C. The rest of their life and the life of another person. (D). All of the above. E. A and B only.

Cindy is preparing for a closing meeting with clients who are considering a deferred fixed annuity. This solution could help them meet their financial goal of supplementing their future retirement income need with an income plan from the deferred annuity. The clients are concerned about liquidity when they elect an income plan from the deferred fixed annuity. What features of the deferred fixed annuity should Cindy discuss that may address the clients concerns?

A. Accelerated Death Benefit Feature. B. Increasing Payment Option. C. Accelerated Income Withdrawal Feature. D. Increasing Rate Feature E. A, B and C (F). B and C

Sarah is preparing for a closing meeting with clients who are considering a deferred fixed annuity. This solution could help them meet their financial goal of supplementing their future retirement income need. During the closing meeting, Sarah will need to disclose certain information about the deferred fixed annuity. Sarah should discuss:

A. Components of the annuity, including its features and benefits. B. Any charges for a deferred annuity. C. The fact that the annuity is not FDIC insured but is backed by the claims paying ability of the underlying insurance company. D. potential market risk of investing in the underlying insurance company. E. A,B and C (F.) All of the above.

Once you and the client have selected a Single Premium Immediate Annuity (SPIA) as a suitable financial solution to meet the client's income needs, your next step is to work with the client to select a particular income plan within the annuity. To assist in this decision, you should:

A. Determine how long the client needs income. B. Explain to the client what happens with a SPIA payments when death occurs. C. Determine if the client needs the income based on one life or two. (D). All of the above. E. A and C only.

Robin, a financial rep, receives a call from a client who would like more information on the tax benefits of non-qualified deferred annuities. In her response, Robin should explain that: annuities are long-term investments, and ...

A. Earning are taxed as capital gains upon withdrawal. (B). Earnings will grow tax deferred until withdrawals are made. NOT SURE!!! C. Beneficiaries will receives a tax-free lump sum distribution in the event of the death of the annuitant.

Sam is meeting with a husband and wife who like the idea of having fixed and guaranteed income backed by Northwestern Mutual. What they are not sure about yet, is when they want to retire. They love what they doing professionally so it could be a year from now or ten years from now. At the next meeting, they would like to review some of the annuity income options they have with Northwestern Mutual. Although there are several more details to discuss, what are some product highlights you want to discuss? I. The income may begin from a Single Premium Deferred Income Annuity within one week after purchase. II. The Single Premium Immediate Annuity offers the Accelerated Income Withdrawal Feature. III. Income payments from the Single Premium Deferred Income Annuity may be delayed up to ten years after contracts issue. IV. A fixed income plan may be elected from a Northwestern Mutual deferred fixed or variable annuity

A. I only B. IV only (C). II and III D. III and IV

Select Silver contract owner, Edward, is age 54. What are his options at the end of the fifth anniversary of owning the contract? I. Renew to a guaranteed period of one, three, five, or seven years. II. The withdrawal charges are now at zero, so the client may withdraw the funds. The client needs to be made aware of the potential 10% penalty for early withdrawals prior to age 59 1/2. III. Renew to a guaranteed period from one to five years, depending on availability. IV. At the end of the fifth contract anniversary, the contract has matured; therefore the contract must be settled to an income plan.

A. I only. B. IV only (C). II and III D. III and IV

Jim and Judy are in their early sixties. They want to secure a guaranteed income stream that will last as long as either one is alive. Their rep. explains that their need can be met if they choose: I. An immediate annuity with a 50-year period certain, since it will last until they are just over 110 years old. II. Joint-life fixed immediate annuity with a period certain. III. A joint-life fixed immediate annuity. IV. A single-life annuity with a 20-year period certain.

A. I only. B. IV only. (C). II and III. NOT SURE!!! D. III and IV

During the ____________ phase of a deferred fixed annuity, a specified interest rate is credited for a period of time. During the _____________ phase, the on the contract value at the time this phase begins.

A. Income/Accumulations. (B). Accumulation/Income C. Payout/Deferral D.Accumulation/Deferral

Northwestern Mutual's Select Fixed Annuities offers three contract choices that offer unique features. Which one of the following is NOT one of the three contract choices?

A. Platinum (B.) Bronze C. Silver D. Gold

Evan phoned his rep. when he received his most recent statement on his deferred annuity. Evan is 65 and purchased the fixed annuity seven years ago to be a conservative part of his portfolio. Evan has read and heard a lot about how the market is beginning to take off and that variable annuities have considerable growth potential. He wants to get out of the fixed annuity and purchase a variable annuity to earn a higher return. The rep. should:

A. Recommend that Evan consider an exchange into a variable life insurance policy because it had growth potential with a death benefit. B. Recommend that Evan surrender the annuity and invest in bond mutual funds because they work similar and cost less. C.Review Evan's investor profile factors and other facts to determine a suitable course of action to address his concerns and needs. (D). Update his investor profile factors and risk tolerance, and discuss with Evan the long term focus of a variable annuity and how it will outperform the fixed annuity within the first couple of years. Not Sure!

William Purchased a deferred annuity several years ago. Alex, his representative, helped him choose a Northwestern Mutual fixed annuity that matched his time horizon and needs. Now, William, age 75, needs income and is requesting that Alex provide options with his deferred annuity. During a brief conversation, Alex did learn from William that he is nervous about outliving his retirement assets. Which one of the following is a possible and logical option from Alex to discuss with William?

A. Recommend that William move the funds from the deferred annuity into a 5 year CD because William is conservative. (B). Recommend that William look at various guaranteed lifetime income options fro his existing deferred annuity and possibly reallocate other assets into a Single Premium Immediate Annuity that provides guaranteed income. C.Recommend that William move the dollars that are in the deferred annuity into a Single Premium Immediate Annuity and then choose a seven year period certain income plan because that coincides with William's life expectancy. D.Do nothing. William should wait three to five years before he begins receiving income. Not Sure!

John is preparing to meet with his clients who wish to talk about annuities as one way to help meet their financial goals of supplementing their future retirement income. During the meeting with his clients, John learns that they are about ten years from retirement and would like something that is conservative and will protect their principal until they are ready to begin receiving income. Based on this limited information, what type of annuity might best work for John's clients?

A. Single Premium Variable Annuity. B. Single Premium Immediate Annuity. (C). Deferred Fixed Annuity or Single Premium Deferred Income Annuity. D. Deferred Variable Annuity.

Recommendations on the purchase of exchange of a deferred fixed annuity should only be made if the financial rep. has a reasonable basis to believe that the customer would benefit from certain features of deferred fixed annuities, such as:

A. Tax-deferred growth B. Annuitization C. Variety of sub-account options (D). All of the above. E. A and B only

Recommendations on the purchase or exchange of a deferred annuity should only be made if the financial rep has a reasonable basis to believe that:

A. The customer has been informed of the various features and benefits of deferred annuities. B. The customer would benefit from certain features of deferred annuities. C. The particular deferred annuity as a whole is suitable for the particular customer. (D). All of the above. NOT SURE!!! E. A and C only

A customer must be informed of the various features of deferred annuities, such as:

A. The withdrawal charge period and potential withdrawal charges. B. Any potential tax penalty, if customers make withdrawals from or surrender deferred annuities before reaching the age of 59 1/2. C.The potential charges for features of any additional contract riders. D. Charged in interest rates over time. (E). All of the above.

A client who is interested in annuites, and who has a long-term horizon until retirement, yet has little tolerance for investment risk, would be best suited by which of the following:

A.Single Premium Immediate Annuity (B). Deferred fixed annuity C. Immediate variable annuity D. Deferred variable annuity