Fixed Settlement Option

Question 1

What’s the purpose of a fixed settlement option?

Answer 1

To provide you with periodic income payments.

Question 2

A settlement option is the continuation of…

Answer 2

of the original contract

Question 3

What does FPI stand for?

Answer 3

fixed percent increase

ex: 2015: $2,000
2016: $2,060 (3% increase every year)
2017: $2,121.80 (3% increase every year)

Question 4

A beneficiary decided he wants to elect 10-year CPI for his payment option on his fixed settlement option. What does this mean?

Answer 4

Consumer Price Index. He wants his yearly payments to fluctuate with CPI. There’s potential for an increase in his payments, but it’s a wager

Question 5

The unfortunate thing about choosing CPI is that your payments might decrease

Answer 5

Wrong!! Payments will not decrease, they only increase or stay the same

Question 6

Fixed Settlement Option, what are the 4 choices?

Answer 6

• fixed period
• specified amount
• life income
• joint life income

Question 7

What’s the magical phrase for Life Income and Joint life Income?

Answer 7

Certain period. If you die before the certain period, your beneficiaries will get money. If you die AFTER the certain period, your beneficiaries will not get anything

Question 8

Annie’s mom died and Annie knows that her mom had a fixed settlement option for which she was named as a beneficiary, and yet Annie was told by Thrivent that she will not be getting any money!! Why would this be?

Answer 8

Her mom must have died AFTER the certain period

Question 9

Sandra doesnt want to elect the CPI option for her payment because she doesn’t want her payment to decrease if the CP Index goes down.

Answer 9

Sandra is wrong, she doesnt understand how it works. Her payments will never go down, only increase or stay the same

Question 10

The FP told you that he’s going to let his beneficiary know that $2,000 is needed to open a settlement option

Answer 10

Actually sir, although $2,000 is usually the magical number it really depends on the TYPE of funding contract. Therefore, you should probably run an illustration to get the right answer

Question 11

A beneficiary has 2 options when it comes to his settlement option

Answer 11

revocable or irrevocable

Question 12

What’s the nice thing about a revocable fixed settlement option?

Answer 12

you can take additional withdrawals or surrender it if you would like

Question 13

What is the not so nice thing about an irrevocable settlement option?

Answer 13

cannot surrender it on part or in full