Advanced Professional Practice Flashcards
7 cards from real RAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Advanced Professional Practice flashcards as text
A client wants guaranteed income for life but is concerned about dying early and losing principal. Which annuity payout option addresses this concern?
Answer: Life with period certain
A life with period certain option guarantees income for the annuitant's life, but if death occurs before the period ends, payments continue to the beneficiary for the remaining guaranteed term.
Which of the following best describes the role of the state guaranty association in the context of annuity contracts?
Answer: It provides limited coverage if the issuing insurer becomes insolvent
State guaranty associations provide limited protection (typically up to $250,000 in present value of annuity benefits) if the issuing insurance company becomes insolvent.
A Qualified Longevity Annuity Contract (QLAC) allows a client to defer income from an IRA until age:
Answer: 85
Under IRS rules, a QLAC can defer required minimum distributions on the premium used to purchase the contract until age 85, providing longevity protection.
A producer discovers that a client's existing annuity has no surrender charges remaining. The producer recommends a replacement annuity. What must the producer primarily demonstrate?
Answer: The replacement is in the client's best interest based on total cost-benefit analysis
Even when no surrender charges exist on the old policy, a replacement must still be in the client's best interest, with documented rationale comparing benefits, features, and costs.
Which type of annuity rider provides the contract owner with a guaranteed minimum account value after a specified period, regardless of market performance?
Answer: Guaranteed minimum accumulation benefit (GMAB)
A GMAB guarantees that the contract's account value will equal at least a specified minimum (often the original premium) after a defined holding period, protecting against market downturns.
For estate planning purposes, a non-qualified annuity owned by a non-natural person (such as a corporation) loses which key tax advantage?
Answer: Tax deferral on inside buildup
IRC Section 72(u) requires non-qualified annuities owned by non-natural persons to be treated as ordinary investment contracts, eliminating tax deferral on growth.
A client is purchasing an indexed annuity. The 'participation rate' refers to:
Answer: The percentage of the index gain credited to the annuity
The participation rate determines what percentage of the index's gain is credited to the annuity; for example, a 70% participation rate on a 10% index gain credits 7% to the contract.