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Series 66 > Session 8 > Flashcards

Session 8 Flashcards

1
Q

Annuity

A

is generally a contract between an individual and a life insurance company, usually purchased for retirement income

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2
Q

Combination Annuities

A

attempts to provide a monthly payout that consists of guaranteed fixed amounts as well as a payout that might keep pace with inflation

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3
Q

Index Annuities (IA)

A

credits interest to the owner’s account using a formula based on performance of stock or index. Guaranteed against loss and max capped

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4
Q

Deferred Annuity

A

an annuity may be purchased with a single lump-sum investment

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5
Q

Periodic Payment Deferred Annuity

A

allows a person to make periodic payments on monthly, quarterly or annually basis

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6
Q

Immediate Annuity

A

are purchased by depositing a single lump sum

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7
Q

How long does it take for a payout for Immediate Annuity?

A

60 Days

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8
Q

Accumulation Stage

A

is the pay in period…if you miss a payment you wont forfeit the annuity

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9
Q

Accumulation Units

A

is an accounting measure that represents an investor’s share of ownership in the separate account

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10
Q

Sales charges and Variable annuities

A

there is no max…just has to be reasonable

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11
Q

Annuity Pay Out Options (4)

A

1- Life Annuity/ Straight Life/ Pure Life
2- Life Annuity w/ Period Certain
3- Joint Life with Last Survivor Annity
4- Refund Annuity

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12
Q

Life Annuity/ Straight Life/ Pure Life

A

biggest payout…the annuitant receives periodic payments over his lifetime

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13
Q

Life Annuity w/ Period Certain

A

an annuitant receives payments for life, with certain minimum period guaranteed

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14
Q

Joint Life with Last Survivor Annity

A

covers two or more people and payout is conditioned on both lives

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15
Q

Refund Annuity

A

payments will continue after death of the insured until the full value of the initial premium has been returned

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16
Q

Mortality Guarantee

A

annuity companies guarantee payments for as long as annuitants live

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17
Q

Operating Expense Guarantee

A

insurance companies must project their own expense and set a ceiling for fees

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18
Q

Assumed Interest Rate (AIR)

A

usually conservatively provides an earnings target for the separate account

19
Q

Variable Annuity Payouts

A

are determined by mortality tables and value of the account (aren’t guaranteed)

20
Q

Taxation of Annuities

A

since the contribution for annuities are made after tax only the earnings are taxed upon withdrawals

21
Q

9 Advantages of Variable Annuities

A 
1- Tax- Deferred Growth
2- Guaranteed Death Benefit
3- Lifetime Income
4- IRS Section 1035
5- No 70 1/2 age restriction
6- No contortion limit
7- Choice of 25-30 different subaccounts w/ different objectives
8-Tax-free transfer between subaccounts
9- No probate
22
Q

IRS Section 1035

A

you can exchange from an annuity without an tax consequences

23
Q

Term Insurance

A

is protection for a specified period…offers pure protection and is the least expensive

24
Q

5 Main Points of Term Insurance

A

1- Provide temporary insurance protection for specified period
2- They pay the death benefit only if the insured dies during the term of coverage
3- Don’t accumulate cash value
4- Death Protection and premium remain level for the specified term
5- If renewed at the end of the term, the face amount remains the same but the premium will be based on age (Always increase)

25
Q

Whole Life Insurance (WLI)

A

coverage begins on the date of issue and continues to the date of the insured’s death, provided premiums(fixed) are paid

26
Q

Cash Value of Whole Life Insurance

A

combines before death benefit with accumulation element… invest in conservative investments

27
Q

Policy Loans of Whole Life Insurance

A

borrow a portion of the cash value but must be paid back with interest

28
Q

Surrendering the Policy of Whole Life Insurance (3)

A

1- surrender the policy for its cash value
2- take a reduced paid-up policy where the death benefit is decreased and future premiums are no longer required
3- take extended term insurance which pays the beneficiary full face full if die within term

29
Q

Use of Whole Life Insurance

A

good for death benefits and if you need to borrow money in emergency situations

30
Q

Universal Life

A

comprised of two components of death benefit and cash value, but aren’t fixed

31
Q

Characteristics of Universal Life (4)

A

1- Premium payments are separated first being paid toward the insurance protection then to build cash value
2- The policy owner may increase/decrease the death benefit during the policy term
3- Premium amounts may be changed as long as enough premium is paid to maintain the policy. (Flexible)
4- The interest earned by the cash account will vary, subject to a guaranteed minimum

32
Q

Universal Life Interest Rates

A

1- Current Annual Rate (what’s on the market)

2- Contract Rate (Minimum interest rate)

33
Q

Universal Life Death Benefits A

A

provides a level death benefit equal to the policy face value…as the policy cash value increases and the net death protect actually decreases over the life of the policy

34
Q

Universal Life Death Benefits B

A

provides for an increasing death benefit equal to the policy’s face amount plus the cash account. High initial premium and low initial death benefit

35
Q

Universal Life Policy Loans

A

same as with the whole life insurance, must be paid with interest

36
Q

Cash Withdrawal for Universal Life

A

also called a partial surrender and if the amount is paid back later it will be treated as a premium payment

37
Q

Variable Life Insurance

A

cash value in the policy fluctuates with the performance of the separate account( PROVIDES MIN GUARANTEED Death BENEFIT)

38
Q

Scheduled Premium Variable Life

A

is issued with a minimum guaranteed death benefit

39
Q

Flexible Premium Variable Life

A

is a type of variable Life insurance with flexible premiums (Not Guaranteed)

40
Q

For Variable Life what are the 3 deductions to the Premium?

A

1- the administrative fee
2- the sales load
3- state premium taces

41
Q

Sales Charge Max is?

A

9% average over 20 years

42
Q

For Variable Life what are the 3 deductions to the separate account?

A

1-mortalitly risk
2-expense risk fee
3- investment management fee

43
Q

Variable Life Insurance Death Benefit

A

will have a guaranteed amount plus the amount the separate account as accumulated

44
Q

Variable Life Insurance Cash Value

A

reflects the investment held in the separate account and is calculated monthly

Series 66 (8 decks)

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