Question 1: A Tax-Sheltered Annuity (TSA) is available to a(n):

• Accountant
• Insurance agent
• Attorney
• Teacher

Question 2: Of the following choices, which annuity guarantees a given number of income payments whether or not the annuitant is alive to receive them?

• Life-Only Annuity
• Life Annuity with Period Certain
• Variable Annuity
• Temporary Life Annuity

Question 3: Premiums deposited into a Variable Annuity go into:

• The surplus of the insurance company
• A separate account where they are invested in a variety of securities
• The life and health insurance reserves of the insurance company
• A mutual fund

Question 4: An individual has purchased a lump-sum annuity that immediately begins monthly payments. These payments fluctuate depending upon the performance of the stock market. This individual has purchased a(n):

• Immediate Variable Annuity
• Immediate Fixed Annuity
• Deferred Variable Annuity
• Joint & Last Survivor Immediate Fixed Annuity

Question 5: An annuity that can simultaneously provide immediate income and guarantee that the principal is complete restored after a certain period of time is:

• Nonexistent
• Illegal
• A Split Annuity
• A Stretch Annuity

Question 6: The Exclusion Ratio is the proportion of an annuitized payment that is:

• Returned to the beneficiary after the death of the annuitant
• Considered as return of capital and non-taxed
• The interest credited to an WIA after loading
• The method of determining participation

Question 7: When does a penalty tax apply to early withdrawals from an annuity taken in a lump sum?

• If the annuity is an Immediate Annuity
• Before the annuitant is aged 59½ years
• If the annuity owner dies before the withdrawal
• If the annuity owner becomes disabled before the withdrawal

Question 8: As a general rule, except for an immediate annuity, annuities should be considered as a(n):

• Part of a short-term savings account
• Part of a long-term investment strategy
• Alternative to a short-term certificate of deposit
• Source of immediate funds in case of emergency

Question 9: Funds invested in a Variable Annuity separate account are referred to as:

• Sub-accounts
• Participation Units
• Annuitant Funds
• Accumulation Units

Question 10: The one overriding rule concerning investments is:

• The higher the risk, the lower the return
• The higher the risk, the greater the return
• The lower the risk the higher the return
• All investments in internet firms are good investments

Question 11: Fluctuations of investment value in a Variable Annuity are the risk of the:

• Insurance company
• Owner/Annuitant
• Beneficiary
• State Guaranty Fund

Question 12: The even distribution of both principal and interest of an annuity over a specified period of time is called:

• Level Term
• Forfeiture
• Annuitization
• Accumulation

Question 13: Most annuities will allow the owner to make withdrawals:

• Without charge
• Up to 10% of annuity value per year without penalty
• Only if they need to pay for nursing home expenses
• Of the interest only and not the principal

Question 14: Guaranty laws have been established:

• By the federal government
• By the stock exchange
• To protect policyholders against insurer insolvency
• To pay benefits on equity-indexed annuities only

Question 15: With a non-qualified annuity:

• Premiums are tax-deductible
• Interest earned is tax-deferred
• Contribution limitations are the same as with an IRA
• The principal and interest are taxed during annuitization

Question 16: An annuity may help with which one of the major concerns of the elderly?

• Outliving their resources
• Supplementing their Medicare coverage
• Helping them afford a better home
• Paying income taxes

Question 17: If an agent represents himself as being a licensed financial consultant who is connected with a phony senior organization in order to obtain financial information from a prospective senior client then:

• He is guilty of conducting a "pretext interview"
• He is guilty of fraud and subject to immediate imprisonment
• He is somewhat unorthodox but nothing illegal has taken place
• He is simply using a ruse to help diffuse the reluctance of most people to talk to insurance agents

Question 18: Premiums deposited into a variable annuity:

• are co-mingled with all of the other purchasers of variable annuities with that insurer
• are deposited in a separate account for that particular purchaser only
• are deposited in a trust account with the Federal Reserve Bank

Question 19: Some companies offer a benefit which states that the account will be increased to equal a specified percentage of the premium invested after a specified period of time. This is called:

• a variable life guaranteed minimum income benefit
• a minimum death benefit guarantee
• a guaranteed minimum account value benefit
• a return of premium rider

Question 20: Of all of the various methods of helping to spread investment risk the procedure that has the most effect is:

• dollar cost averaging
• asset allocation
• day trading
• reading the Wall Street Journal every morning

Question 21: For persons 60 or over there is a 30-day cancellation period

• and the insurer must refund all premiums paid, less a service fee
• during which time the individual must make a formal request for cancellation with a notarized copy sent to the department of insurance
• when the annuitant or insured may rescind the policy with partial refund of all premiums and fees
• when the annuitant or insured may rescind the policy with full refund of all premiums and fees.

Question 22: The equity indexed annuity is a fixed deferred annuity that uses an external index that reflects the fluctuations of the stock market to determine the interest earned, but most importantly:

• It is a security, regulated by the SEC and an agent must have a securities license
• the conservation of the principal is guaranteed
• It pays extremely high commissions
• it is sold primarily by banks

Question 23: Investment gains under an annuity will:

• never be taxed
• eventually be taxed at capital gains rates
• eventually be taxed at ordinary income tax rates
• be taxed at ordinary income tax rates as earned

Question 24: An annuity that is used to provide payments over a period of time to an injured person is called: (pg 104, pr 4)

• an accident annuity
• a structured settlement annuity
• a flexible variable annuity with limited benefits
• an equity indexed annuity

Question 25: If an annuity contract is held by a trust or other entity as an agent for a natural person, the IRS:

• will treat it as if it was owned by the natural person and taxed accordingly
• will treat it as if was held by a corporation and taxed accordingly
• will never tax the cash value of the contract, except through a probate court
• will tax all assets at capital gains rates

Question 26: The first time an agent violates the California regulations regarding replacement sales, he:

• is liable for a penalty of no less than $1,000 for the first violation
• is liable for a penalty of no less than $5,000 for the first violation
• can make a public apology and return his commission
• be convicted of a misdemeanor, have his license revoked and serve up to 6 months in jail

Question 27: In a Roth IRA, all of the funds may be withdrawn without tax or penalty:

• only if the funds have been in the annuity for at least 5 years
• only if the funds have been in the annuity for at least 10 years
• only if the annuity owner is under 70 ½ years of age
• only if the owner is over 59 ½ years of age

Question 28: Which of the following investments would be considered to have the highest investor risk?

• Individual stocks
• certificates of deposit
• equity indexed annuity
• variable annuity

Question 29: One of the biggest problems that an agent must be cognizant of when discussing sale of annuities with a "senior" prospect is:

• short-term memory loss
• Physical disability
• Lack of funds

Question 30: Annuity benefit payments from a variable annuity is based upon:

• an assumed investment return
• Standard mortality tables as adjusted for annuities
• annuity tables formulated by the American Actuarial Society
• the table of benefits provided in each annuity contract when purchased

Question 31: It is very important when marketing variable annuities that the agent understands the consumer's objectives and the various degrees of risk the client is comfortable with. This is referred to as:

• risk tolerance
• defensive marketing
• meeting SEC requirements
• commission maximization

Question 32: Structuring the contract refers to which of the following:

• deciding whether to purchase a fixed, variable, or indexed annuity
• deciding who to name as owner, annuitant and beneficiary
• deciding whether or not to have a joint annuitant and who that should be
• deciding on the period of the annuity payout

Question 33: When must the written in-home meeting disclosure be delivered to a senior:

• at least 48 hours prior to the meeting
• at least 7 days prior to the meeting
• at least 24 hour prior to the meeting
• no prior notice is required

Question 34: James is utilizing a feature of his variable annuity that causes the same dollar amount of assets to be transferred at regular intervals from his money market option to another investment option, regardless of whether the price of shares of the other option has increased or decreased. This is called:

• Indexing
• Dollar Cost Averaging
• Automatic Asset Balancing
• Asset Allocation

Question 35: An equity-index annuity product that locks in gains at the end of each contract year includes which of the following features?

• The cap rate
• The participation rate
• The annual reset provision
• The credit gain rider

Question 36: A hypothetical EIA features a participation rate of 70% and cap rate of 10%. If the index grows by 17% how much interest will be created to the annuity?

• 10.00%
• 17.00%
• 13.50%
• 11.90%

Question 37: All of the following features will typically generate higher or longer surrender charges, EXCEPT:

• higher interest charges
• annuitization options
• bonus credits
• higher commissions

Question 38: An immediate annuity pays $2,000 per month while both a husband and wife are alive. Upon one annuitant's death the monthly income decreases by $1,000 for the remainder of the surviving spouse's life. What kind of settlement option is this?

• Joint life
• Life with period annuity
• Joint and survivor
• Cash refund

Question 39: Which of the following information must be displayed on any advertisement as defined in the insurance code:

• the word insurance
• all senior designations held by the agent

Question 40: Selling annuities to persons 65 or older for the purpose of qualifying for Medi-Cal is prohibited:

• if the purchaser has assets equal to or less than community spouse resource allowance
• after the purchase the senior or spouse qualifies for Medi-Cal
• In all cases it is illegal

Question 41: Which of these would be an example of illegal "bait and switch" schemes:

• setting an appointment with a prospective client to discuss living trusts when actually intending to get information to sell annuities to the client
• setting an appointment to discuss annuities but discussing LTC insurance as well
• recording the appointment with the permission of the clients
• asking the client if they would refer them to friends and neighbors who could benefit from the information the agent has shared with them

Question 42: SB 483, Kuehl, primarily deals with which of the following:

• Medicare
• Social Security
• Medi-Cal
• Internal Revenue Service

Question 43: A person born in 1957 will not be able to retire with full Social Security benefits until they are age:

• 66.5 years
• 65 years
• 67 years
• 67.5 years

Question 44: Indicators that the client/prospect may not be competent to enter into the purchase of an annuity include all of the following EXCEPT:

• the home is in disarray
• the person forgets that they made the appointment with the agent
• the person walks with a cane

Question 45: The California Life and Health Insurance Guarantee Association will pay due to the insolvency of an insurer:

• the entire amount of funds lost by the owner of an annuity
• up to $100,000 total for funds lost by husband and wife combined
• up to $100,000 each for funds lost by husband and wife
• up to $250,000 for each individual annuity owned

Question 46: An insurer who engages in misconduct against a person 65 years of age or older on a frequent basis or as a general business practice can be liable for a penalty of:

• no more than $100,000
• no more than $300,000
• no less than $300,000
• $10,000 for each separate violation

Question 47: Estate Planning involves which of the following most specifically:

• the orderly process of transferring wealth from one generation to another
• paying for long-term care and other health care expenses
• planning for a comfortable retirement
• saving for a college education for a grandchild

Question 48: Which of the following is the least important to most clients when investing retirement assets?

• Preservation of capital
• Fighting Inflation
• Investing in green energy
• Peace of mind

Question 49: After an annuity is annuitized, the payments are:

• not counted in regard to Medi-Cal eligibility for nursing home charges
• must be paid directly to the state to reimburse Medi-Cal for long-term care
• are exempt under Medi-Cal eligibility law

Question 50: Under current rules, an individual's principal residence is exempt from Medi-Cal property limitations as long as it:

• has been owned by the person asking for Medi-Cal assistance for at least 10 years
• is valued at less than $750,000 adjusted for inflation
• is valued at less than $500,000 adjusted for inflation
• is valued at less than five years of nursing home care at the current daily rates