Annuity 4 Hour Training with Best Interest Standards FINAL EXAM (MA 6000178539)

An annuity is a form of:

The reason an annuity’s cash value is permitted to accumulate on a tax-deferred basis is because:

An indexed annuity credits interest based on _____ of all the stocks listed in the associated market index.

All the following are elements of crediting interest in an indexed annuity EXCEPT for:

Mr. Soto just purchased an annuity and doesn’t plan to begin receiving income payments until he retires in 20 years. What type of annuity did he buy?

Angela purchased an immediate annuity because she plans on annuitizing the contract and receiving income payments:

What type of annuity allows the policyholder to declare the premiums paid as a tax-deduction on the federal income tax return in the year they are paid?

Which of the following individuals is the person insured by an annuity?

Which of the following represents ownership in an entity?

All the following are common uses of annuities, EXCEPT:

Life expectancy _____ during the underwriting process of an annuity.

Annuities are medically underwritten when they provide living benefits in accordance with:

During the accumulation phase of his annuity, Elliott will:

An insurance company determines the amount of each annuity payment based on the cash values being annuitized, plus all the following factors EXCEPT:

Annuity income payments receive the most favorable tax treatment from the IRS if they are made regularly and for a period that lasts more than:

Which of the following statements BEST describes how annuities provide insurance?

You are explaining to your client that the annuity under consideration charges additional fees when compared with other types of annuities. What type of annuity are you discussing?

Rory decides he wants to return the annuity he purchased six months ago under the contract’s free look provision. What do you tell Rory?

Drew’s annuity has a surrender charge period of 7 years. The surrender charge penalty is 7% in Year 1 and decreases by 1% per year. If Drew cancels the annuity in Year 9, what will the surrender penalty be?

If Mr. Elizondo’s annuity has a typical penalty-free withdrawal provision, what percentage of his cash values can he withdraw from the contract without triggering a surrender charge?

Which of the following is not typically a circumstance that triggers a crisis waiver in an annuity?

The IRS uses the term “annuity starting date” to refer to:

Which of the following is NOT one of the options an annuity beneficiary has if the owner died before the contract was annuitized?

Once an annuity has matured, the contract makes payments from its contract values to the annuitant during its _____ phase.

Which of the following is NOT one of the options an annuity beneficiary has if choosing an exception to IRS rules about how to receive payment when the owner died before the contract was annuitized?

Zelda is an annuitant who has chosen to receive a straight life annuity settlement. How will her payments be made?

Enrique wants to receive his annuity payments for a specified number of years. What settlement option has he chosen?

Annuity earnings are taxed on a _____ basis.

Because they receive favorable tax treatment, the growth in _____ accumulate on a tax-deferred basis.

When an annuity is subject to FIFO taxation, it _____ tax-advantaged treatment.

Michelle takes a premature withdrawal from her annuity and the payment of contract values is subject to LIFO taxation. The IRS will consider what funds as paid first from the contract?

Mrs. Panciotti purchased 3 separate annuities from the same insurance company this year. The IRS _____ considers the total of all values in the 3 contracts to be added together and treated as a single contract for tax purposes.

Which of the following is the cost basis in an annuity?

The IRS calculates the cost basis of an annuity on the earliest of the date money is withdrawn from the contract or it’s annuity starting date. What is the “annuity starting date?”

If Mr. Hsieh wants to invest in a product that generates the quick accumulation of cash, what type of annuity should he purchase?

The IRS defines the payments received during the annuitization phase of an annuity as “amounts received as an annuity” or:

Which of the following BEST describes how the exclusion ratio is calculated when periodic payments from an annuity are taxed?

All the following are examples of nonperiodic payments from an annuity, EXCEPT:

Which of the following individuals to a premature distribution from an annuity and is subject to a 10% IRS tax penalty.

The 10% tax penalty imposed by the IRS for premature distributions before age 59 1/2 does NOT apply to:

Exceptions to the 10% IRS tax penalty for premature withdrawal from an annuity before age 59 1/2 include all the following EXCEPT withdrawals made:

What is the term used by the IRS to describe payments that must be taken from annuity cash values to prevent contract owners from avoiding taxation?

With respect to a qualified annuity, required minimum distributions must begin no later than:

If an annuity owner dies, what happens to the contract values for tax purposes?

The interest credited in which of the following annuities will be tax-deferred rather than taxed in the ear it is earned?

Which of the following is a form of fixed annuity?

When Louis died, his estate was valued at $2 million and included his home, bank account, various investments, and a $250,000 annuity. How much of his estate will be taxed?

The IRS imposes a gift tax when people give away assets and property in all the following situations EXCEPT:

Which of the following is NOT an exception to the IRS gift tax?

Rodney gifted a $50,000 annuity to his son Roger. Who must pay the gift tax?

Section 1035 of Internal Revenue Code allows the _____ exchange of certain life and annuity contracts if no loss or gain is realized.

____ is information that is reasonably appropriate to determine whether a recommendation addresses the consumer’s financial situation, insurance, needs, and financial objectives.

What is the purpose of an annuity “recommendation?”

In connection with an annuity transaction, producers _____ when they have satisfied specific obligations regarding care, disclosure, conflict of interest, and documentation.

Mariah has a reasonable basis to believe her recommendation effectively addresses her client’s financial situation, insurance needs, and financial objectives when viewed ____.

A consumer is interested in buying an indexed annuity, a product Producer Ernie and his insurance company do not sell. The Care Obligation specifically states Producer Ernie does NOT have to do which of the following?

What has a policyowner done when he stopped making payments into a annuity contract and is now drawing income payments from the annuity?

When should consumer profile information be collected?

Which of the following statements BEST describes the duty a producer owes a consumer in connection with the best interest care obligation?

Producer Barros is helping a client replace an annuity. He must determine whether the consumer replaced or exchanged another annuity during _____.

Which of the following producers IS subject to the care obligation?

The disclosure obligation requires producers to provide consumers with all the following information EXCEPT:

Which of the following producers exhibits a conflict of interest?

An insurer’s supervision system must establish and maintain all the following EXCEPT:

Producer Pamela committed a prohibited practice when she discouraged a consumer from:

Certain financial professionals are permitted to be compliant with this regulation under a safe harbor provision. Which of the following is NOT one of those financial professionals?

The required annuity training course must be approved for at least ___ of continuing education credit.

Chelsea’s _____ annuity is both an insurance product and security.

ABC Company’s annuity training course was not approved by the insurance department because it contained a chapter on which of the following topics:

Audrey obtained her life insurance producer license after the regulation went into effect. Which annuity training course may she take?

Who is responsible for ensuring that Meredith, a new producer, complies with annuity training requirements?

Appendices A, B, and C address all the following topics EXCEPT:

When Xavier buys his ____ annuity, he has the option to make the purchase with a single premium or a series of premium payments made over time.

Per IRS rules, all annuities must begin making income payments before the annuity starting date. Each annuity contract stipulates a similar requirement, calling for annuitization before the contract’s _____.

Each fixed annuity promises a ____, which is a rate of interest that cannot be less than the amount or percentage stated in the contract.

An insurance company’s _____ is one into which premiums are deposited, along with other funds.

The _____ contract Aldo just purchased invests its cash value into the insurance company’s separate account.