Annuities

Question 1

What are the rights of variable annuity investors?

Answer 1

They can vote on policy changes (like mutual funds)

Question 2

Variable A’s are regulated by which act?

Answer 2

Act of 1940 (like mutual funds)

Question 3

VA’s passed where at death?

Answer 3

Designated beneficiary

Question 4

When do VA’s produce income?

Answer 4

Only upon withdrawal

Question 5

Which has greatest effect on value of annuity units?

Answer 5

Securities fluctuations in separate account

Question 6

What do VA’s guarantee?

Answer 6

• Payments for life

- Expenses wont increase

Question 7

How are separate accounts similar to mutual funds?

Answer 7

• Diversified, professionaly managed

- Voting rights

Question 8

What is annuitization?

Answer 8

Converting an annuity investment into a series of payments

Question 9

What is assumed interest rate? (AIR)

Answer 9

The rate selected by the insurance company to determine value of contract

Question 10

What would decline the value ?

Answer 10

If performance is lower that IR

Question 11

What is deferred annuity?

Answer 11

Delays distributions until the owner chooses

Question 12

What is accumulation unit?

Answer 12

Determines interest in separate account - during accumulation stage

Question 13

Separate account?

Answer 13

Holds funds paid by variable annuity guys

Question 14

Assumed Interest Rate?

Answer 14

Basis of projected annuity payments

Question 15

What is an unqualified annuity?

Answer 15

When client has paid with after tax dollars

Question 16

What is the cost basis equal to?

Answer 16

Total contributions

Question 17

Investor contributed 100k to a variable annuity, now it’s worth 150k. What is taxable upon withdrawal?

Answer 17

50k

Question 18

What does tax deferred mean?

Answer 18

Not taxed until withdrawn

Question 19

Which VA contract pays most monthly?

Answer 19

Life-only annuity