6 Multiple Choice 2 points Which of the following is correct? Annuities are considered IRD assets. An exchange of a life insurance policy for an annuity is not a tax free exchange under Section 1035. A loss on a variable annuity can be deducted even if the annuity is exchanged for another annuity. Non-qualified annuities do not have to comply with the minimum distribution rules.
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Supreeta N.
21. What is the standard free-look period provided by most annuity contracts? a. 10 days b. 30 days c. 45 days d. 60 days 24. Pete invested $50,000 in a variable annuity 15 years ago when he was 52. The contract is now valued at $180,000, and Pete elects to annuitize under a straight life option. The AIR is 5 percent, and the annuity purchase rate is $6.50. What is Pete's initial income payment? a. $900 b. $1,170 c. $2,500 d. $3,250 25. At the age of 68, Seth elected a life and 10-year term certain option for the payout of his $100,000 annuity. All of the following statements are true EXCEPT: a. The annuity will make income payments for a minimum of 10 years. b. Seth will receive an income stream for as long as he lives. c. At Seth's death, his beneficiary will receive a minimum of $100,000. d. If Seth were to die at the age of 79, no payment would be made to a beneficiary. 29. What is the early distribution tax penalty that applies to withdrawals from a deferred annuity equal to? a. 10 percent of the total withdrawal b. 10 percent of the taxable amount of the withdrawal c. 10 percent of the nontaxable amount of the withdrawal d. 10 percent of the amount invested in the contract
Akash M.
17. Lila invested $10,000 in one of Long Life Insurance Company's annuity contracts. When issued, the contract was paying a 5 percent rate of return. Two years later, Long Life increased this rate to 7 percent. Underlying Lila's contract is a 3 percent rate of return, guaranteed for the life of the contract. What kind of annuity does Lila own? a. a fixed immediate annuity b. a variable immediate annuity c. a fixed deferred annuity d. a variable deferred annuity 19. Long Life Insurance Company offers a fixed annuity that includes a standard death benefit provision, a seven-year surrender charge period, the option to annuitize at the annuitant's age 65, and a free withdrawal period. What is the length of the free withdrawal period? a. until the contract owner dies b. until the annuitant's age 65 c. ten years d. seven years 20. What is the duration of an annuity's free withdrawal period? a. It is the same as its surrender charge period. b. It is based on the amount of the initial premium. c. It is longer for nonqualified contracts than for qualified contracts. d. It is left to the discretion of the contract owner.
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