Chapter 7

Question 1

Product sold through insurance companies that contain investment options that subject the owner to market risk

Answer 1

Variable contract

Question 2

Where do variable products purchasers place their money?

Answer 2

In a separate account

Question 3

Investment account at a policy owner can allocate premium an account value dollars to a variety of investment accounts with an insurance companies separate account

Answer 3

Sub account

Question 4

Permanent policy designed offer more competitive returns to potentially keep pace with her act as a hedge against inflation.

Answer 4

Variable life insurance

Question 5

Features of variable life insurance policies

Answer 5

Fixed premiums, cash value growth dependent upon performance of separate account, death benefit fluctuates, but face amount is the guaranteed minimum

Question 6

Policy combines investment choices of separate account with flexibility offered for premiums. Premiums paid are directly deposited into separate account with no guarantees to death benefits or cash value growth. Policy premiums are flexible. Has no general account

Answer 6

Variable universal life policy

Question 7

Variable insurance policies separate account is valuated how often

Answer 7

Calculated daily at 4 PM

Question 8

How often is the cash value calculated for a variable insurance policy

Answer 8

Monthly

Question 9

How often is the death benefit on a variable life insurance policy calculated

Answer 9

Annually

Question 10

Each policy owner of a variable life insurance has a minimum free look provision of how many days

Answer 10

Minimum 45 day free look provision

Question 11

A policy owner can exchange their variable contract very traditional for my contract within a minimum of how long from the original contract day

Answer 11

Two years

Question 12

What fees are deducted from the premium for a variable life insurance policy

Answer 12

Administrative fees state premium taxes sales charges up to 9%

Question 13

What is deducted from the separate account of a variable life insurance policy

Answer 13

Expense risk fee, mortality risk fee, investment management fee

Question 14

The insurance company is required to send a report to the policyholder detailing the contracts current death benefit and cash value , Must also list any policy loans outstanding and provide a record of all premium payments made and expenses related to the contract how often?

Answer 14

Annually

Question 15

Taxation of cash values loans with drawls and surrenders a variable life and variable universal Insurance policies

Answer 15

FIFO Withdrawals are not taxable until the amount of premiums paid is exhausted.

Question 16

Cost basis

Answer 16

Amount of premiums paid

Question 17

Allows policy owners to transfer the assets of one policy to another without current income tax liability. The taxation will be referred to the future when the cost basis and games are transferred to the new insurance policy.

Answer 17

Section 1035

Question 18

What type of exchange is not permitted for 1035 exchange?

Answer 18

Annuity to a life policy is not permitted

Question 19

Two phases annuity contract

Answer 19

Accumulation phase (pay in) 
Annuity phase (pay out)

Question 20

Annuity payout that’s payable for as long as the annuitant lives and upon death or payments sees provides the highest monthly income

Answer 20

Life income (pure or straight)

Question 21

Annuity payout option payable for life or a specified period Which ever is longer. If the annuitant dies before the end of period Certain A beneficiary receives the balance of the payments for the remaining time

Answer 21

Life income period Certain

Question 22

Annuity payout payable for the lifetime of the annuitant. Upon death if you have annuitant has not received an amount equal to the total of all payments made into the annuity the balance is refunded to the beneficiary either in a lump sum cash refund or in installments

Answer 22

Unit refund life

Question 23

Annuity payout payable to two named annuitants while both are living. Upon the death of the first annuitant survivor benefits continue until the survivor dies

Answer 23

Joint and last survivor

Question 24

Once an annuity is annuitized who takes ownership of the funds in the annuity?

Answer 24

The insurer

Question 25

Variable annuity payout calculated based on the following factors

Answer 25

Principal balance of the contract, annuitants age, payout options selected, assumed interest rate

Question 26

If the actual performance of the separate account is greater than the AAIR the amount of the next payment will

Answer 26

Increase

Question 27

The actual performance of the separate account is less than the AIR the amount of the next payment will

Answer 27

Decrease

Question 28

If the actual performance of the separate account is the same as the AIR The amount of the next payment will be how much

Answer 28

The same as the previous months payment

Question 29

If the annuitant dies prior to annuitization What will the beneficiary receive?

Answer 29

The greater of the current value of the contract or the owners cumulative premiums paid minus any withdrawals

Question 30

What does provision will wave or reduce the surrender charge penalty if you knew that needs access to the annuity funds due to a disability or confinement in a nursing home

Answer 30

Waiver of surrender charges

Question 31

Withdraws made from an annuity are taxed on what basis?

Answer 31

LIFO

Question 32

The formula used to determine the portion of each payment that is a return of cost basis and therefore excluded from taxation

Answer 32

Exclusion ratio