Life & Health Insurance Annuities and Retirement Plans Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Annuities and Retirement Plans flashcards as text
Which of the following is a characteristic unique to a Roth IRA compared to a traditional IRA?
Answer: Qualified distributions are tax-free
Roth IRA qualified distributions are completely tax-free because contributions are made with after-tax dollars, unlike traditional IRAs.
What is the term for the amount an annuity owner would receive if they surrendered the contract before the end of the surrender charge period?
Answer: Cash surrender value
The cash surrender value is the account value minus any applicable surrender charges and market value adjustments upon early termination of the contract.
A SEP IRA is most suitable for which type of worker?
Answer: Self-employed individuals and small business owners
SEP IRAs (Simplified Employee Pension) are designed for self-employed individuals and small business owners, allowing high contribution limits.
Which annuity payout option will typically produce the highest monthly income payment?
Answer: Life only
The life only option pays the highest monthly amount because there is no guarantee period or survivor benefit reducing the payment.
Under a 457(b) plan, which employees are eligible to participate?
Answer: Employees of state and local governments and certain nonprofits
457(b) plans are deferred compensation plans available to employees of state and local governments and certain tax-exempt nonprofit organizations.
What is the 'accumulation unit' in a variable annuity during the accumulation phase?
Answer: A unit of measure tracking the owner's share of the separate account
Accumulation units represent the owner's proportionate interest in the variable annuity's separate account subaccounts, with their value fluctuating based on investment performance.
Which of the following best describes a non-qualified annuity?
Answer: Funded with after-tax dollars outside of a qualified plan
Non-qualified annuities are purchased with after-tax money outside of any qualified retirement plan, so only the earnings are taxable upon distribution.