CRPC Annuities and Insurance Products in Retirement

Question 1

What is the key distinction between a fixed annuity and a variable annuity?

Accepted Answer

Fixed annuities guarantee a minimum interest rate while variable annuities invest in market-linked subaccounts

Answer

Fixed annuities are only available in qualified accounts

Answer

Fixed annuities have no surrender charges

Answer

Variable annuities cannot provide lifetime income

Question 2

What is the primary retirement planning benefit of a single premium immediate annuity (SPIA)?

Accepted Answer

Guaranteed lifetime income beginning within one year of purchase

Answer

Tax-free investment growth

Answer

Unrestricted access to the full account value

Answer

No surrender charges on withdrawals

Question 3

What is a deferred income annuity (DIA)?

Accepted Answer

An annuity purchased today with income payments beginning at a specified future date

Answer

An annuity that defers taxes on investment gains

Answer

An annuity that defers surrender charges

Answer

An annuity that delays required minimum distributions

Question 4

How does a fixed indexed annuity (FIA) credit interest?

Accepted Answer

It credits interest linked to an index subject to caps or participation rates while protecting principal from losses

Answer

It directly participates in all stock index gains and losses

Answer

It invests directly in index mutual fund subaccounts

Answer

It pays a fixed percentage of the index's annual value

Question 5

What is the exclusion ratio used to calculate for a non-qualified immediate annuity?

Accepted Answer

The tax-free portion of each payment as a return of after-tax cost basis

Answer

The percentage subject to the 10% early withdrawal penalty

Answer

The ratio of earnings to principal in a deferred annuity

Answer

The surrender value reduction percentage

Question 6

What is the 'free look' period for annuity contracts?

Accepted Answer

A state-mandated period (typically 10–30 days) to cancel the contract for a full refund

Answer

A period during which the annuity earns a higher bonus interest rate

Answer

A one-year period with no surrender charges

Answer

A period during which all fees are waived