Annuity Suitability Certification Training | Final Exam (50 Questions and Answers)

Annuity Suitability Certification Training | Final Exam (50 Questions and Answers) All of the following statements about annuity taxation are true EXCEPT: A. When an annuity is gifted to a non-spouse, the giver of the gift may be subject to income taxes and gift taxes. B. The IRS 10% penalty on early withdrawals does not apply at death. C. Corporations benefit from tax deferred growth D. When an annuity is gifted to a spouse, there is no tax implication. - ansD. Life with period certain You have met with a client to review his questions about purchasing a deferred annuity for accumulating retirement savings. Which of the following statements is appropriate to share with the client? A. Annuities guarantee protection against all forms of retirement risk. B. Annuities always outperform all other retirement accumulation products C. Annuities are a suitable accumulation vehicle for financial objectives. D. Annuities are long-term savings products appropriate for long-term investment horizons - ansC. Annuities are a suitable accumulation vehicle for financial objectives. An investor purchased a variable annuity from a financial adviser in her bank's investment services department. In the event of financial failure of the insurer, the annuity contract value is A. Protected by FDIC coverage B. Protected by SIPC coverage C. Protected by the state guaranty association D. Not protected - ansC. Protected by the state guaranty association Which of the following riders does NOT guarantee an income benefit? A. Guaranteed Lifetime Withdrawal Benefit (GLWB) B. Guaranteed Minimum Income Benefit (GMIB) C. Guaranteed Minimum Withdrawal Benefit (GMWB) D. Guaranteed Minimum Accumulation Benefit (GMAB) - ansD. Guaranteed Minimum Accumulation Benefit (GMAB) During a period when the underlying index of an index annuity drops in value, what is the worst outcome the annuity owner can expect? A. Interest credits of the minimum guaranteed rate only B. Loss of 20% of premium C. Loss of 5% of premium D. Only 10% interest credited - ansA. Interest credits of the minimum guaranteed rate only A couple plans to retire in 6 months. They would like to purchase an annuity that ensures the payment of benefits that begin at retirement and continue for as long as they both live. The annuity best suited to provide these benefits is a: A. Immediate annuity with a life with cash refund payout option. B. Flexible premium deferred option with a 20- year period certain C. Flexible premium deferred annuity with a joint life and survivor payout option D. Immediate annuity with a joint life and survivor payout option - ansD. Immediate annuity with a joint life and survivor payout option When explaining the features of a variable annuity to a prospective purchaser, the agent should discuss all of the following features EXCEPT: A. Ability to transfer values among subaccounts B. History of rate cap renewal C. Fees and expenses D. Flexibility in investment choices - ansB. History of rate cap renewal All of the following fees apply to both fixed and variable annuities EXCEPT: A. Administrative fees B. Mortality charges C. Fund expenses D. Premium taxes - ansD. Premium taxes Annuity contracts include all of the following features EXCEPT: A. Death benefits during accumulation B. Favorable capital gain taxation on payouts C. Tax-deferred accumulation D. Multiple payout options - ansB. Favorable capital gain taxation on payout An applicant would like to purchase a fixed annuity that will pay benefits for her entire life, but pay a lump-sum death benefit to a beneficiary at her death if the entire contract's purchase amount has not been paid out. This applicant should consider which of the following annuitization options? A. Joint live with survivor B. Life with refund C. Fixed-period installment D. Life with period certain - ansD. Life with period certain A retiree who owns an SPIA wishes to receive the highest possible payment over the next 20 years. Which of the following payout options will best respond to this requirement?