CRPC Annuities and Insurance Products in Retirement 2

Question 1

What does a guaranteed minimum withdrawal benefit (GMWB) rider on a variable annuity provide?

Accepted Answer

A guarantee of a minimum annual withdrawal percentage for life regardless of account performance

Answer

A guarantee that the account value will never decline

Answer

A waiver of surrender charges on all withdrawals

Answer

A guaranteed minimum death benefit amount

Question 2

What is the 'benefit base' in an annuity living benefit rider?

Accepted Answer

A notional value used to calculate guaranteed withdrawals, often growing at a set roll-up rate

Answer

The actual market value of the annuity account

Answer

The total premiums paid into the contract

Answer

The current death benefit amount

Question 3

Which annuity rider waives surrender charges if the owner is confined to a nursing home or hospital?

Accepted Answer

Confinement waiver rider

Answer

Long-term care acceleration rider

Answer

Disability income rider

Answer

Return of premium rider

Question 4

What is the typical surrender charge period for most deferred annuities?

Accepted Answer

5–10 years

Answer

1–2 years

Answer

15–20 years

Answer

No surrender charge period

Question 5

Under LIFO (last in, first out) tax rules for non-qualified deferred annuities, how are withdrawals taxed?

Accepted Answer

Withdrawals are treated as earnings first and are fully taxable as ordinary income until earnings are depleted

Answer

All withdrawals are tax-free until the cost basis is fully recovered

Answer

Withdrawals are prorated between earnings and basis

Answer

Withdrawals are subject to long-term capital gains rates

Question 6

What is a Section 1035 exchange in the context of annuities?

Accepted Answer

A tax-free exchange of one annuity contract for another annuity contract

Answer

A taxable rollover from an annuity to a traditional IRA

Answer

An exchange of a life insurance policy for a term policy

Answer

A provision allowing annuity proceeds to be reinvested in stocks