FREE BUSINESS AND STUDY GAMES ABOUT 2011 CHASE

PDF Download

FREE BUSINESS AND STUDY GAMES ABOUT 2011 CHASE

ANNUITY T EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -200 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation Question 1: what happens to funds when partial exchange is done? How are the new funds and old funds established at princ and interest

Answer:

all values retain the same proptortion of principal to earnings.

Question 2: What are the requirements to take a loan out on a TSA?

Answer:

except for home loan, plan must be repaid w/in 5 yrs, must make substantial repayments at least qtrly, cannot exceed $50k or 1/2 of vested value

Question 3: what are the limits on a surrender free w/d

Answer:

can only be annually, a % of premium invested; % of accumulated values; % of earnings

Question 4: what does annuitized incoe consist of?

Answer:

both principal and interest

Question 5: high water mark

Answer:

thes method looks at the index value at varios pts during the interst credit period, such as contract anniversary dates. the highest of the index on these dates is compared to the index level at the start of the period and the diff is cred

Question 6: two tiered annuity

Answer:

2-tiered provides 2 tiers of inerest credits. higher interest if contract is maqintained and annuitized and much lower tier of interest if contract is not annuitiaed Question 7: Felip has annuity tied to S&P 500. He will get 90% of pos change and 0 for neg.What kind of annuity does he have?

Answer:

indexed deferred annuity.

Question 8: guaranteded mon rate of return

Answer:

underlying a fixed annuity contract for its life

Question 9: who issues annuities?

Answer:

insurance companies

Question 10: VA income exclusion formula

Answer:

investment in contract (prem)/number of anticipated pmts

Question 11: how often do insurers revalue the accumulation units in subaccts?

Answer:

often, typically daily Question 12: may, 65,annuitized her $150k VA strt life, AIR is 5% and gives initial pmt of $950. If the values in her contract net 5% nxt mo what will the pmt be?

Answer:

$950.

Question 13: is annuitization irrevocable?

Answer:

traditionally yes, however, recently, some insurers have begun ro re-engineer their structures to provide more liquidity during payout phase. This includes: w/d's during annuitzat; advances of given % of income & can stop annuitization and take remainder Question 14: if the index is was at 1000 at beginning of contract, and then went to 1100 at the end how much will the credited to the indexed annuity?

Answer:

the index increased 10% so (1100-1000)/1000 credit to the annuity is 10%

Question 15: accumulations stage

Answer:

period during which funds are deposirted inot the contract and are credited with a certain rate of interest earnings or grow in relation to the performnce of the investments in which they are deposited.

Question 16: split option

Answer:

a portion of the annuity funds can be used to purchase an immediate annuity to produce income while the balance remains invested in the deferred annity to grow back the orig amount over the same period

Question 17: Contract maintenance fee

Answer:

annual fee imposed by the insurance co to cover the admin costs of maintainint the contract. typically ranges from $25-40 epr yr but often waived for lrgr acct values >$50k.

Question 18: Using capital to purchas income defines what?

Answer:

annuitization

Question 19: VA's admin svc charge

Answer:

covers admin costs associated with servicing the annuity, incl the cost of transferring funds, tracking premium deposits, issuing confirmations and statements, record deeping and cus svc. Avg cost is .16313 % of contracts assets

Question 20: assumed interest rate (AIR)

Answer:

the rate of investment return or growth that the contract is assumed to project to experience during the annuitization stage, and is the benchmark all funds will be measured

Question 21: Guaranteed min income benefit (GMIB)

Answer:

guarantees that a min level of income payments will be paid if the owner decides to annuitize his or her contract, regardless of the value of the contract upon annuitization.

Question 22: when does an immediate annuity pay out

Answer:

typically within 1 month, always w.in 1 year

Question 23: STATs

Answer:

stranger originated annuity transactions - controversial practice where a 3rd party investor persuades an indiv-usually sick-to buy an annuity with a guaranteed min dealth benefit and to diesignate 3rd prty as bene. Annuity buyer is give lump sum.

Question 24: t or f fixxed annuity owners do not bear any invest risk?

Answer:

true - they are guaranteed a min rate of return

Question 25: TEFRA

Answer:

Tax equity and fiscal Responsibility Act. changed law from FIFO to LIFO taxation of annuities and also changed the penalty from 5% to 10% if w/d funds before age of 59 1/2

Question 26: Why is annuitization not very popular?

Answer:

accumlation mindset-programmed to save; lack of understanding; liquidity concerns-irrevocable; bequest motivations-wanting to leave money to heirs