DC Annuities and Retirement Insurance Products Flashcards

A DC resident purchases an annuity that begins making income payments immediately after a lump-sum premium is paid. This is called a(n):

Answer: Immediate annuity

An immediate annuity converts a lump-sum payment into an income stream that begins within one payment period (usually within a year) of the single premium payment.

Under DC insurance regulations, annuity contracts sold by insurers must include a free-look period of at least:

Answer: 10 days

DC requires a minimum 10-day free-look period for annuity contracts, allowing purchasers to return the contract for a full refund.

A DC variable annuity's 'separate account' is best described as:

Answer: An investment account where the premium is invested in sub-accounts such as mutual fund-like portfolios, with returns tied to market performance

The separate account in a variable annuity holds the policyholder's funds in investment sub-accounts, and the contract value fluctuates based on the performance of those investments.

In DC, an annuity agent selling variable annuity products is required to hold which type of license in addition to a life insurance license?

Answer: A FINRA securities license (Series 6 or 7) and applicable state variable products license

Because variable annuities are securities, agents must hold appropriate FINRA securities registrations (Series 6 or 7) in addition to their state insurance license.

A DC fixed annuity contract guarantees the contract owner:

Answer: A minimum guaranteed interest rate and principal protection

Fixed annuities credit a set guaranteed interest rate and protect the principal from market losses, offering predictable, stable growth.

DC insurance suitability rules for annuity sales require agents to:

Answer: Determine that the annuity is appropriate for the customer's financial situation, needs, and objectives before recommending it

DC suitability regulations require annuity producers to gather information about the consumer's financial profile and ensure the recommended product is suitable before completing the sale.