Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Wealth Management Essentials > Chapter 14 > Flashcards

Chapter 14 Flashcards

1
Q

An annuity designed to overcome uneven taxation by spreading the tax load over the life of the annuity. It can only be purchased with non-registered funds.

A

prescribed annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

A type of “insurance contract” that promises to pay the holder certain specified benefits based on the value of one or more specified pools of assets.

A

segregated fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A fundamental contractual right associated with segregated funds. It is the promise that the beneficiary will receive at least 75% of the money invested upon the demise of the annuitant.

A

death benefit guarantee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

An annuity designed for people with a reduced life expectancy because of illness. The annuity payments are higher than they are for people of the same age with no health issues.

A

impaired life annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

An annuity that allows payments to be put off for several years. If purchased with registered funds, payments can be put off no later than the end of the year the annuitant turns 71. It can be for life or for a fixed term

A

deferred annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

An annuity in which the amount of the monthly payment changes according to the value of investments in a segregated fund into which premiums are placed. This annuity has a limit (called a floor) below which benefits may not fall.

A

variable annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

An annuity that pays a guaranteed income to a married or common-law couple as long as either spouse or partner is alive.

A

joint life annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A risk that considers the possibility of outliving one’s retirement funds; it is the risk that monies accumulated for retirement will get depleted before the individual passes away.

A

longevity risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

An annuity that makes increased payments if investment yields are higher than expected or if the issuing company’s expenses are lower than expected. It has a guaranteed portion and a dividend portion.

A

participating annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The legal term for a segregated fund.

A

individual variable insurance contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A benefit that protects investors from downside risk while providing participation in the markets and the potential for market gains. It is a hybrid vehicle made up of investments, insurance, and guaranteed income.

A

guaranteed minimum withdrawal benefit (GMWB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

An annuity that allows early retirees to bridge the income gap until they receive benefits from OAS and CPP/QPP. At age 65, their annuity payments decrease by the amount of government benefits.

A

integrated annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

An annuity which guarantees that, if the annuitant dies before having received the deposit amount, income payments will continue to the beneficiary until the whole amount is paid out.

A

installment refund annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

An annuity that pays the annuitant a guaranteed income until death, regardless of how long it was in place. It provides the most guaranteed income per dollar of premium paid.

A

straight life annuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

An annuity that provides a lump-sum payment of the unpaid balance to the beneficiary if the annuitant dies before having received the deposit amount.

A

life annuity with a cash refund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

A fundamental contractual right associated with segregated funds. It is the promise that the contract holder will receive at least 75% of the money invested at the end of the holding period.

A

maturity guarantee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

An agreement to pay money for a personal injury claim in which all or part of the contract calls for future periodic payments. It is usually funded through an annuity purchased from a life insurer.

A

structured settlement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

An annuity that provides the annuitant with a specified guaranteed monthly or annual income for a specified number of years. The most common end date is age 90.

A

term certain annuity, also known as a fixed term annuity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A non-profit organization that provides protection to policyholders in situations where an insurance company becomes insolvent.

A

Assuris (formerly called CompCorp)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Every life insurance company authorized to sell
insurance policies in Canada is required by federal, provincial, and territorial regulators to become a member of ________

A

Assuris

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

If a life insurance company fails, Assuris guarantees that the annuity policyholder will retain up to $______ per month, or ___% of the promised monthly income benefit, whichever is higher.

A

$2,000

85%

22
Q

Responsible for monitoring the solvency of insurance companies and determining minimum capital surplus requirements.

A

The Office of the Superintendent of Financial Institutions

23
Q

This type of annuity covers someone for life, but also has a guaranteed payout period that the beneficiary would be entitled to if the annuitant were to die prior to the guaranteed payout period.

A

Life Annuity with A Guaranteed Payout Period

24
Q

With this type of annuity, payments increase each year in line with a formula, usually related to increases in the cost of living

A

indexed annuity

25
Q

designed to meet the needs of a person who wants the guaranteed income of an immediate annuity, but who is reluctant to deplete capital immediately. The funds available for annuity purchase are split between an immediate, term-certain annuity and a single-premium deferred annuity

A

split-annuity

26
Q

what are the taxes on annuity payments from a personal injury settlement?

A

They are tax-free

27
Q

Segregated funds, annuities, and guaranteed minimum withdrawal benefits are types of _________ contracts

A

insurance

28
Q

As with annuities, investors in segregated funds are protected by _________, which guarantees that, if the issuing company fails, the contract holder will retain up to $________or ____% of the promised guaranteed amounts, whichever is higher.

A

Assuris

$60,000 or 85%

29
Q

Segregated funds are rated for risk in the same manner as mutual funds, using

A

standard deviation

30
Q

Segregated Funds Risk Rating Scale:

A 
Standard deviation:
0-5 = Low Risk
6-10 = Low to Medium
11-15 = Medium
16-19= Medium to High
20 = High
31
Q

Provincial insurance legislation requires that the

guaranteed amount be at least ____% of the principal amount over a minimum ____ year holding period.

A

75%

10 year

32
Q

There are basically three types of segregated fund maturity guarantees:

A
  • A deposit-based guarantee- gives every deposit made by the client its own guarantee amount and maturity date.
  • A yearly policy based guarantee - makes record keeping simpler by grouping all deposits made within a 12-month period and giving them the same maturity date.
  • A policy-based guarantee- (the most generous type) bases all maturity guarantees on the date the policy was first issued.
33
Q

Insurance companies offering 10-year maturity guarantees that exceed the statutory requirement of 75% impose restrictions on who qualifies for the enhanced guarantee. Normally, the restrictions are based on

A

age

34
Q

If the proceeds of the contract are less than the ACB, income tax is payable on the _____________ amount

A

guaranteed

35
Q

A hybrid vehicle composed of investments, insurance, and guaranteed income

A

GMWB

36
Q

With a _________, the investor retains control of the
investment and has the option to cash out at the market value at any time, forfeit all guarantees, and terminate the
contract.

A

Guaranteed Minimum Withdrawal Benefit (GMWB)

37
Q

GMWB, as traditionally offered, has two phases:

A

the savings phase (or accumulation phase) and the payout phase.

38
Q

In the savings phase of a GMWB, a bonus of ___% to ___% is given to the investor for each year during which no withdrawal is made based on the initial deposit amount. This bonus would increase the Guaranteed Withdrawal Balance.

A

3% to 5%

39
Q

Three types of guarantees are offered with a GMWB:

A
  • Income guarantee
  • Maturity guarantee
  • Death benefit guarantee
40
Q

As mentioned previously, this amount is typically 5% of the guaranteed withdrawal balance, either at the time of
initial investment or after resetting.

A

Guaranteed Withdrawal Amount

This is the amount that will be paid out during the year

41
Q

The income guarantee is represented by the GWA if the annuitant is under age 65. If the annuitant is 65 or older, it
is represented by the

A

lifetime withdrawal amount (LWA).

42
Q

If a withdrawal is made that is more than the GWA or LWA, the __________ _______ _________is reduced proportionately and the GWA or LWA is recalculated based on the new guaranteed withdrawal balance.

A

guaranteed withdrawal balance

43
Q

Insurance products have the benefit of bypassing

A

probate

44
Q

The benefits of a GMWB include the ability to

A

bypass probate, potential creditor protection, and protection by Assuris.

45
Q

the premium for a segregated fund versus a mutual fund can be anywhere from ___ to ___ basis points

A

25 to 100

46
Q

The assets within GMWBs are invested in

A

segregated funds

47
Q

where the pool of assets in the segregated fund purchases institutional class units of the underlying mutual fund

A

fund-on-fund structure,

48
Q

Certain investors cannot invest in GMWBs because their age. The age limit imposed by insurance companies, typically ____ to ____, applies to the initial sale of the contract.

A

75 to 80

49
Q

Deferred annuities generally allow for full or partial withdrawals, although a ________ charge may be levied

A

Withdrawal

50
Q

During the savings phase of a GMWB, Assuris covers…

A

up to $60,000 or 85% of the guaranteed withdrawal balance, whichever is high.

51
Q

During the payout phase of a GMWB, Assuris covers

A

up to $2,000 per month or 85% of the guaranteed income benefit, whichever is higher.

Wealth Management Essentials (24 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions