Series 65
A client purchased an index annuity from you 3 years ago and made an initial deposit of $100,000. The contract calls for a 90% participation rate with a 15% cap. The index had a return of +20% in the 1st year, -5% the 2nd year, and +10% the 3rd year. The investor's current value is approximately
$125,350
In the past 20 years, 55-year-old James has put $27,000 into accumulation units in his nonqualified variable annuity. The current value of his units is $36,000. He wishes to withdraw $16,000 to assist with his grandchild's college education. If he is in the 28% tax bracket, what is his tax consequence on the withdrawal?
$3,420.00
Alexander Wimpton purchased a variable life insurance policy 10 years ago. The policy has a $500,000 face amount which has grown to $525,000 due to the performance of the selected separate account subaccounts. Three years ago, Wimpton borrowed $50,000 against the policy which has never been repaid. The effect of this is that Wimpton's total death benefit today is
$475,000
An agent presenting a variable life insurance (VLI) policy proposal to a prospect must disclose which of the following about the insured's rights of exchange of the VLI policy?
Federal law requires the insurance company to allow the insured to exchange the VLI policy for a permanent form of life insurance policy, issued by the same company for 2 years with no additional evidence of insurability.
A client purchases a fixed annuity that will immediately begin paying $2,000 a month for life. What is the annuitant's greatest risk?
Inflation risk
Larry purchased a deferred annuity and, on his 65th birthday, annuitized the product under a life with 15-year certain option. His spouse, Linda, is the beneficiary. Which of the following statements is CORRECT?
Payments would be made to Larry as long as he lives, but should he die prior to reaching age 80, Linda will receive payments until Larry's 80th birthday.
Which of the following is NOT considered to be an annuity purchase option?
Periodic payment immediate annuity
Which of the following is a possible advantage of scheduled premium variable life insurance over whole life insurance?
Possible inflation protection for the death benefit
Which of the following would most likely put a limit on the amount of interest to be credited to an index annuity?
The cap rate
In a scheduled premium variable life contract, which of the following has a guaranteed minimum?
The death benefit
A 57 year-old client has $100,000 in a non-qualified variable annuity and $100,000 in a mutual fund with a dividend reinvestment plan. Coincidently, each was purchased 10 years ago with a deposit of $50,000. If the client needs $50,000 to use as a down payment for a vacation home, which would have the most severe tax consequences?
The variable annuity
An investor in a variable annuity will be purchasing
accumulation units
When discussing the purchase of a scheduled premium variable life insurance policy with a client, it would be CORRECT to state that
by surrendering the policy, its cash value may be obtained
Variable annuities
may have 20 or more subaccount investment options
Among the reasons why deferred variable annuities might not be a suitable investment for seniors are all of the following EXCEPT
potential inflation protection
When a client purchased an annuity with a 5% bonus, it means
the bonus is added to the initial payment
A client of an IAR mentions that he has received a prospectus for a variable annuity, but does not really understand the product. It would be reasonable for the IAR to explain that a variable annuity offers an investor
the opportunity to invest in equity securities on a tax-deferred basis
All of the following are advantages of universal life insurance EXCEPT
the policy is guaranteed never to lapse
