SIE RETIREMENT PLANS EXAM
QUESTIONS & VERIFIED CORRECT
ANSWERS
fixed annuity CORRECT ANSWER - insurance company guarantees a specific return to the
investor
insurance product - insurance company bears the investment risk
variable annuity CORRECT ANSWER - no guarantee on rate of return
investor assumes investment risk
must be registered as a security and have a prospectus
A ________________ annuity is a UIT CORRECT ANSWER - variable
What type of annuity must be registered as a security? CORRECT ANSWER - variable
What type of annuity sells units and not shares? CORRECT ANSWER - Variable
AIR CORRECT ANSWER - Assumed Interest Rate
benchmark for initial payment
annuity amount increases if AIR is greater than stated
,annuity amount decreases if AIR is less than stated
SIA CORRECT ANSWER - separate investment account
used to keep investments in variable annuities apart from other holdings
mutual fund invested
accumulation units CORRECT ANSWER - instead of buying shares
holder buys units
represent the ownership interest in the separate account
mandatory investment is required in _____________________ annuity CORRECT ANSWER -
variable
dividends and interest are automatically reinvested and grow tax deferred (unlike mutual fund)
If you distribute funds before _________________ then there is a tax penalty. CORRECT
ANSWER - 59 1/2
Death Benefit During Accumulation Phase CORRECT ANSWER - if the contract holder dies
before the payments start, the insurance company will pay the actual dollar amount invested to
the beneficiary
once annuitized though - no death benefit
Annuity units CORRECT ANSWER - the payments from an annuity are expressed in these units
, (after payments are completed - accumulation units are changed to annuity units)
fixed number depending on criteria (age, smoking etc.)
annuity unit value fluctuates and keeps pace with inflation since equity prices rise with inflation
monthly payment is fixed number of annuity units x unit value
life annuity CORRECT ANSWER - pays the person until death
has largest monthly payments
Life Annuity with Period Certain CORRECT ANSWER - guarantees to provide income payments
for a minimum period of time or life.
Payments will continue to a beneficiary should the person die during the specified period.
If the person lives longer than the period, it continues until they die
Annuitized CORRECT ANSWER - no more payments go in
Joint and Last Survivor Annuity CORRECT ANSWER - Covers the lives of the person and another
person. Payments continue until both parties die.
Payments usually smaller than straight life.
Unit Refund Life Annuity CORRECT ANSWER - An annuity payout option in which the person
receives payment for life.
QUESTIONS & VERIFIED CORRECT
ANSWERS
fixed annuity CORRECT ANSWER - insurance company guarantees a specific return to the
investor
insurance product - insurance company bears the investment risk
variable annuity CORRECT ANSWER - no guarantee on rate of return
investor assumes investment risk
must be registered as a security and have a prospectus
A ________________ annuity is a UIT CORRECT ANSWER - variable
What type of annuity must be registered as a security? CORRECT ANSWER - variable
What type of annuity sells units and not shares? CORRECT ANSWER - Variable
AIR CORRECT ANSWER - Assumed Interest Rate
benchmark for initial payment
annuity amount increases if AIR is greater than stated
,annuity amount decreases if AIR is less than stated
SIA CORRECT ANSWER - separate investment account
used to keep investments in variable annuities apart from other holdings
mutual fund invested
accumulation units CORRECT ANSWER - instead of buying shares
holder buys units
represent the ownership interest in the separate account
mandatory investment is required in _____________________ annuity CORRECT ANSWER -
variable
dividends and interest are automatically reinvested and grow tax deferred (unlike mutual fund)
If you distribute funds before _________________ then there is a tax penalty. CORRECT
ANSWER - 59 1/2
Death Benefit During Accumulation Phase CORRECT ANSWER - if the contract holder dies
before the payments start, the insurance company will pay the actual dollar amount invested to
the beneficiary
once annuitized though - no death benefit
Annuity units CORRECT ANSWER - the payments from an annuity are expressed in these units
, (after payments are completed - accumulation units are changed to annuity units)
fixed number depending on criteria (age, smoking etc.)
annuity unit value fluctuates and keeps pace with inflation since equity prices rise with inflation
monthly payment is fixed number of annuity units x unit value
life annuity CORRECT ANSWER - pays the person until death
has largest monthly payments
Life Annuity with Period Certain CORRECT ANSWER - guarantees to provide income payments
for a minimum period of time or life.
Payments will continue to a beneficiary should the person die during the specified period.
If the person lives longer than the period, it continues until they die
Annuitized CORRECT ANSWER - no more payments go in
Joint and Last Survivor Annuity CORRECT ANSWER - Covers the lives of the person and another
person. Payments continue until both parties die.
Payments usually smaller than straight life.
Unit Refund Life Annuity CORRECT ANSWER - An annuity payout option in which the person
receives payment for life.
