Life Insurance Flashcards
How does a continuous premium whole life policy differ from a limited pay whole life policy?A. The time period in which premiums will be paidB. The availability of cash value loansC. The availability of nonforfeiture optionsD. The settlement options
A. The time period in which premiums will be paid
Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT forA. A cash value loan is taken outB. Automatic premium loan provision is utilizedC. The policy is surrendered for less than what was paid into itD. Dividend is issued
C. The policy is surrendered for less than what was paid into it
What kind of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?A. Variable universal lifeB. Modified endowment contractC. Adjustable lifeD. Graded premium whole life
A. Variable universal life
All of these statements concerning universal life insurance are false EXCEPTA. Death benefits are normally taxableB. Policy loans are not permittedC. Premiums or face amount cannot be changedD. Policy indicates how much of the premium is used toward company expenses
D. Policy indicates how much of the premium is used toward company expenses
How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies?A. Survivorship life policy is lowerB. Survivorship life policy is higherC. Depends on the investment performance of the underlying accountsD. Both have the same actuarial costs
A. Survivorship life policy is lower
Which statement regarding universal life insurance is correct?A. Cash value accumulations have a guaranteed minimum interest rateB. Policyowner can change the face amount but not the premiumC. Policyowner can change the premium but not the face amountD. Partial withdrawals cannot be made from the policy's cash value
A. Cash value accumulations have a guaranteed minimum interest rate
Which statement regarding whole life insurance is accurate?A. Cash value loans are not permittedB. Insurance coverage can continue for lifeC. Policy normally matures at retirementD. No cash value accumulations
B. Insurance coverage can continue for life
All of these are considered features of whole life insurance EXCEPTA. Cash value accumulationB. Permanent coverageC. Initial premium is lower than for an equivalent amount of term insuranceD. Policy loans are allowed
C. Initial premium is lower than for an equivalent amount of term insurance
Which of these policies is considered a whole life policy?A. Credit lifeB. Single premium lifeC. Renewable lifeD. Convertible life
B. Single premium life
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?A. Remain the sameB. Decrease but never increaseC. Increase but never decreaseD. Fluctuate with changes in the cash account
D. Fluctuate with changes in the cash account
An individual who purchases a modified life insurance policy expectsA. a higher rate of return B. coverage for two people C. an improvement in future income D. a flexible face amount
C. an improvement in future income
Assets that back the non-guaranteed values of variable life insurance products are held in which account?A. Trust account set up by the insured B. Separate account set up by the insurer C. General account of the insurer D. Money market account
B. Separate account set up by the insurer
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate forA. Ten year term insurance for a person aged 55 B. Ten year term insurance for a person aged 45 C. Yearly renewable term insurance for a person aged 55 D. Yearly renewable term insurance for a person aged 45
A. Ten year term insurance for a person aged 55
What kind of life policy typically offers mortgage protection?A. Whole lifeB. Decreasing termC. Increasing termD. Level term
B. Decreasing term
Which of these life insurance policies do NOT contain cash value provisions?A. Modified whole life B. Universal life C. Decreasing term life D. Adjustable life
C. Decreasing term life
What type of policy can group term life insurance normally be converted to? An individual renewable policy An individual level term policy An individual permanent life insurance policy A group permanent life insurance policy
An individual permanent life insurance policy
Which statement about group life insurance is INCORRECT?Cost can be shared between employer and employee Each participant requires evidence of insurability A minimum number of employees participating may be required Employer is issued a master policy
Each participant requires evidence of insurability
Which statement regarding the certificate of insurance is accurate? It is an insurance contract between the employer and insurer Indicates evidence of an employee's insurance coverage Each certificate of insurance is underwritten on an individual basis It is issued by the employer to the employee
Indicates evidence of an employee's insurance coverage
What is the reason that insurance companies require a minimum number of employees participating in a group insurance plan?Efficiency is maximized Adverse selection is minimized Profits are maximized Claims are minimized
Adverse selection is minimized
An employer has a group life insurance plan in place for his employees. How would an employee in poor health be treated in this situation?Approved on a graded basis Not eligible for insurance on this plan Eligible for the same type of coverage as the other employees Must pay a rating based on risk
Eligible for the same type of coverage as the other employees
Any employee insured under a group life insurance plan is normallygiven a master certificate covered on a noncontributory basis required to show proof of insurability protected by term life insurance
protected by term life insurance
The conversion option for group term insurance may be exercised by an employeeat any time while still employed within 2 years of the hire date within 31 days of terminated employment after providing proof of insurability
within 31 days of terminated employment
If an employer pays for accidental death and dismemberment insurance for its employees, the amount paid by the employer is generallytax deductible to the business non-deductible to the business partially deductible to the business considered taxable income to each employee
tax deductible to the business
Which of these occurrences could improve an insurer's ability to reduce premiums?Expense factor increase Mortality rates increase Rate of earnings on investments increase Requiring monthly premium payments instead of annual
Rate of earnings on investments increase
Which life insurance settlement option pays lifetime benefits to two or more people?Life income with period certain Joint Joint and survivor Life income
Joint and survivor
Which life insurance settlement option pays a stated monthly payment until both principal and interest are exhausted?Fixed amount installment option Fixed period installment option Life income option Interest only option
Fixed amount installment option
Life insurance premiums are based on what three factors?Mortality, interest, dividends Morbidity, interest, expenses Mortality, interest, expenses Morbidity, interest, dividends
Mortality, interest, expenses
Which statement most accurately describes a single premium whole life policy? Premiums that can only be paid from a single source A single premium that is due annually Paid-up policy that offers lifetime protection Paid-up policy that offers limited protection
Paid-up policy that offers lifetime protection
During the early years of a whole life insurance policy, the cash value will normally beequal to the total premiums paid more than the total premiums paid less than the total premiums paid unavailable as a policy loan
less than the total premiums paid
The highest mortality rate belongs to which group?Age 60 females Age 70 males Age 60 males Age 70 females
Age 70 males
Which tax is normally associated with an individual's death?Excise tax Consumption tax Federal estate tax Ad valorem tax
Federal estate tax
What kind of arrangement gives the policyowner the right to change the beneficiary?Contestable designation Incontestable designation Irrevocable designation Revocable designation
Revocable designation
The reason for backdating a policy is to avoid being considered a substandard risk due to a recent cancer diagnosis to obtain a premium rate based on an earlier age to decrease the face amount to decrease the Contestable period
to obtain a premium rate based on an earlier age
The Medical Information Bureau consists of members from which group? Doctors Hospitals Insurance companies Underwriters
Insurance companies
All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPTAcquire a statement of good health signature Gather the initial premium Review policy with applicant Leave a conditional receipt with client
Leave a conditional receipt with client
A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true? Premium will be refunded with interest and no death benefit paid Premium received by insurer is considered to be unearned Proceeds are prorated to 1/12th of the full amount Beneficiary receives $50,000 income tax-free
Beneficiary receives $50,000 income tax-free
The premiums paid by an employer for his employee's group life insurance are usually considered to betax-deductible to the employer partially deductible to the employee tax-deductible to the employee taxable income to the employee
tax-deductible to the employer
Which of these is NOT considered to be a cost connected with an individual's death? Funeral expense Tax liability Business expenses Probate costs
Business expenses
Which of the following is NOT a reason for a business to buy key person life insurance?The reduction in sales as a direct result from death of the key employee A void in leadership if the key person were to die The loss of company revenues while a replacement is being sought An increased pension liability if the key employee dies
An increased pension liability if the key employee dies
Which of these factors does NOT influence an applicant's need for life insurance? Lifestyle of the applicant Number of dependents Future educational costs of the dependents Self-maintenance expenses
Self-maintenance expenses
With life insurance, the needs approach is used primarily in determining which insurance company to purchase the coverage from how much life insurance a client should apply for the type of life insurance that should be purchased a budget for the surviving dependents to follow in the event of the client's death
how much life insurance a client should apply for
Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?Estate taxes Unemployment tax expenses Funeral expense Living expenses
Unemployment tax expenses
Which of the following disability buy-sell agreements is best suited for businesses with a small number of partners?Split dollar plan Entity agreement Cross-purchase agreement Key person plan
Cross-purchase agreement
Which of these is NOT relevant when determining the amount of personal life insurance needed? Existing life insurance coverage Local unemployment rates Household income Household debt
Local unemployment rates
Which of these pays an income to two or more annuitants until the death of the last annuitant?Joint life annuity Deferred survivor annuity Joint and survivor annuity Survivorship annuity
Joint and survivor annuity
The contract owner in a single premium deferred annuity (SPDA) receives immediate benefit payments makes only one premium payment can make tax-free withdrawals until the principal is recovered is also the beneficiary
makes only one premium payment
When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest minusbailout option charge surrender charges taxes owed expenses and withdrawals
expenses and withdrawals
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity? When the contract has been held for a stated time period For the entire length of the contract Never When the cash value has reached a stated minimum amount
When the contract has been held for a stated time period
Which of the following is NOT a valid contract exchange?An annuity exchanged for a life insurance policy An annuity exchanged for another annuity A life insurance policy exchanged for another life insurance policy A life insurance policy exchanged for an annuity
An annuity exchanged for a life insurance policy
When a sum of money undergoes capital liquidation, that sum willincrease in value remain the same indefinitely decrease in size create tax deductions
decrease in size
A business may purchase an annuity for all of the following reasons EXCEPTStructuring a liability settlement payment Funding a non-qualified deferred compensation plan Accumulating assets on a tax-deferred basis Providing a pension to employees
Funding a non-qualified deferred compensation plan
When does interest income for a flexible premium deferred annuity get reported for federal income taxes?Never After the principal has been exhausted When the distributions are received from the contract During the accumulation phase
When the distributions are received from the contract
How do benefit payments fluctuate over time in a variable life annuity?Benefit payments stay fixed Reflects changes in the market value of assets in a separate account Annuitant controls any benefit payment changes Any benefit payment fluctuations have to be approved in writing by the owner
Reflects changes in the market value of assets in a separate account
Which of the following normally pertains to an immediate annuity?Tax-free benefit payments Installment premium payments Lack of an accumulation period Lump-sum benefit
Lack of an accumulation period
The surrender charge on many deferred annuity contracts are waived when theannuitant becomes unemployed annuitant dies or becomes disabled contract's interest rate falls below a stated percentage contract is canceled within the first year
annuitant dies or becomes disabled
Which of the following is NOT an intended use of an annuity?Obtain income benefits for a stated period of time for more than one person Accumulate assets on a tax-deferred basis Create immediate lifetime income benefits Create new funds upon the death of a wage-earner
Create new funds upon the death of a wage-earner
A business may purchase an annuity for all of the following reasons EXCEPTStructuring a liability settlement payment Funding a non-qualified deferred compensation plan Accumulating assets on a tax-deferred basis Providing a pension to employees
Funding a non-qualified deferred compensation plan
A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct? If the interest rate falls below a specified level, the surrender charge is waived If the interest rate rises above a certain level, the surrender charge is waived It allows the Life and Health Guaranty Association to bailout the insolvent insurer A reinsurer will make the remainder of the annuity payments if the original insurance company becomes insolvent
If the interest rate falls below a specified level, the surrender charge is waived
What determines how much an annuitant is paid for a variable annuity? Varies according to how many outstanding annuity units Payments fluctuate as annuitant gets older The market value fluctuations of the securities backing it Varies according to the insurer's investments in its general account
The market value fluctuations of the securities backing it
When a large sum of money is used to structure monthly payments, which product is typically used?A 401(k) plan A 403(b) plan A deferred annuity An immediate annuity
An immediate annuity
Which of the following would NOT be appropriate for an immediate annuity? A lottery winner who opted for a lump-sum payment Setting up a college savings fund for a young child A beneficiary collecting the face amount of a life insurance policy Someone who just won a large settlement
Setting up a college savings fund for a young child
Setting up a college savings fund for a young child continue after the purchase payments stop continue after the benefit payments start continue after the annuitant dies continue after the annuity has been surrendered
continue after the purchase payments stop
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity? Protection against living too long Equity loans A fixed rate of return Protection against long-term inflation
Protection against long-term inflation
Ron recently purchased an immediate, straight life fixed annuity. His benefit payments willdiscontinue after a stated number of years remain a constant dollar amount for the duration of the annuity period pay a lump sum if the annuitant dies vary according to the underlying investment performance
remain a constant dollar amount for the duration of the annuity period
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that wereobtained from the state's Guaranty Association accumulated from the invested principal given up by the annuitant's refund beneficiary not distributed to life annuitants who died before life expectancy
not distributed to life annuitants who died before life expectancy
Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value?Variable life policy Modified life policy Flexible premium fixed annuity Immediate fixed annuity
Flexible premium fixed annuity
An owner's cost basis for a non-qualified deferred annuity is typically the same as the annuity's cash value premiums paid into the annuity benefits payable to the annuitant interest earned within the annuity
premiums paid into the annuity
In a qualified retirement plan, the yearly contributions to an employee's accountare not tax-deductible are restricted to minimum levels set by the IRS are restricted to maximum limits set by the IRS must be matched dollar-for-dollar by the employer
are restricted to maximum limits set by the IRS
Which of the following is TRUE about a qualified retirement plan that is "top heavy"?More than 30% of plan assets are in key employee accounts More than 40% of annual additions are for key employee accounts More than 50% of plan assets are in key employee accounts More than 60% of plan assets are in key employee accounts
More than 60% of plan assets are in key employee accounts
How are qualified Roth IRA distributions normally treated for tax purposes? 10% penalty tax is applied Taxed as ordinary income Capital gains tax is applied Received income tax-free
Received income tax-free
An employer that offers a qualified retirement plan (as opposed to a non-qualified plan) to its employees is eligible toavoid ERISA regulations make tax-deductible contributions to the plan make tax deductible contributions to key employees only make partial tax-deductible contributions to the plan
make tax-deductible contributions to the plan
In an individual retirement account (IRA), rollover contributions aresubject to capital gains tax subject to ordinary income tax partially limited by dollar amount unlimited by dollar amount
unlimited by dollar amount
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?10% tax penalty for early withdrawal Capital gains tax Income tax and penalty tax Ordinary income tax
Income tax and penalty tax
A life insurance producer's underwriting duties may includeapproving or declining a life insurance application seeking additional information requested by the insurance company ordering an MIB report determining the rate classification of the applicant
seeking additional information requested by the insurance company
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? 10% is withheld for income taxes 20% is withheld for income taxes 30% is withheld for income taxes Nothing is withheld
20% is withheld for income taxes
A description of a qualified plan's insurance contract may be found in which ERISA reporting form?Annual return/report (Form 5500) Shareholder's report IRS Form 1040 Summary report (Form 6500)
Annual return/report (Form 5500)
Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?Surrender charge is applied The account can be rolled into the surviving spouse's IRA Distributions will be received tax-free if surviving spouse is over age 59 1/2 Future distributions are payable to the owner's estate
The account can be rolled into the surviving spouse's IRA
Misrepresenting pertinent policy provisions relating to coverage after a loss isA concealment in insurance application An unfair claims settlement practice An unfair discrimination between individuals A violation of the principle of adhesion
An unfair claims settlement practice
The Director may suspend a producer's license when the producerFails to notify the insurance department of change of premium trust account location Rebates a portion of the commission to the insured Shares commissions with similarly licensed producers Fails to report annual commission earnings to the insurance department
Rebates a portion of the commission to the insured
Claims settlement practices of insurers are regulated by:The Internal Revenue Service The National Association of Insurance Commissioners Claims adjusters State insurance departments
State insurance departments
In Ohio, viatical settlement brokers are permitted to do all of the following EXCEPTCharge a fee for their services Advertise the availability of viatical settlements Introduce viators to settlement providers Make the first transaction up to 30 days before approved for a license
Make the first transaction up to 30 days before approved for a license
A cease and desist order issued against an agent Suspends the agent's certificate or broker's license Prevents the agent from receiving commissions Prohibits a specific practice listed in the order Terminates the agent's appointment with the insurer
Prohibits a specific practice listed in the order
A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that These policy premiums will vanish The policy guarantees payment of these premiums The policyowner forfeits the option of paying these premiums from other sources The policyowner may need to resume premium payments depending on actual results
The policyowner may need to resume premium payments depending on actual results
During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT Misstatement of age in the application Material misrepresentation in the application Fraud in the purchase of the policy Material concealment in the purchase of a policy
Misstatement of age in the application
All of the following are examples of unfair claim settlement practices EXCEPTFailing to promptly provide a reason for a claim denial Refusing arbitrarily and unreasonably to pay claims Denying unsubstantiated claims on a timely basis Misrepresenting pertinent facts of coverage
Denying unsubstantiated claims on a timely basis
An insurable risk requiresthat the chance for both a loss or gain exists the loss must be catastrophic that the chance of loss be calculable that the loss must be incalculable
that the chance of loss be calculable
All of these statements correctly describe an aleatory contract EXCEPT A legal wager is considered an aleatory contract Potential unequal exchange of value for both parties Only one party makes any kind of legally enforceable offer Element of chance is involved
Only one party makes any kind of legally enforceable offer
Straight whole life insurance can be accurately described in all of these statements EXCEPTPolicy protection normally expires at age 65 Nonforfeiture values are available to the policyowner Provides level protection with level premiums Cash value loans are permitted
Policy protection normally expires at age 65
How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs
Survivorship life policy is lower
Which statement concerning a decreasing term life policy is accurate?Cash value decreases over the policy period Premium decreases over the policy period Face amount decreases over the policy period Face amount stays the same over the policy period
Face amount decreases over the policy period
Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes? The gain is treated as taxable income and a penalty tax is imposed on the gain The gain is treated as taxable income but no additional penalties are applied The gain is not taxable but a penalty is assessed Surrendering an MEC is considered a tax and penalty-free transaction
The gain is treated as taxable income and a penalty tax is imposed on the gain
When does the insured stop making payments under a thirty-payment whole life policy?At the time of death or 30 years after the policy's inception, whichever comes first It depends on the performance of the underlying investment account When the cash value surpasses the face amount At age 100
At the time of death or 30 years after the policy's inception, whichever comes first
What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued? $0 $50,000 Under $50,000 initially, but decreases annually over time Under $50,000 initially, but increases annually until fully insured
Under $50,000 initially, but increases annually until fully insured
Which of the following combinations best describe a universal life insurance policy?A mutual fund and an endowment policy A term insurance policy and a whole life policy A modified endowment policy and an annual term insurance policy A flexible premium deposit fund and a monthly renewable term insurance policy
A flexible premium deposit fund and a monthly renewable term insurance policy
Which statement regarding the waiver of premium rider is accurate?Policy loans are used to keep the policy active Cash payment is not directly provided to the policyowner Insurance companies are required to offer this to all policyowners Premiums are waived in the event of bankruptcy
Cash payment is not directly provided to the policyowner
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?Total premiums paid plus the policy face amount Face amount plus interest accrued Interest accrued plus total premiums paid Face amount minus any outstanding loan balances
Total premiums paid plus the policy face amount
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy? Reduced paid-up nonforfeiture option Accelerated benefits option Extended term nonforfeiture option Cash surrender option
Extended term nonforfeiture option
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?Reduced paid-up option Accelerated (living) benefit Return of Premium benefit Extended term option
Accelerated (living) benefit
What happens when a policyowner borrows against the cash value of his life insurance policy?The death benefit would be reduced by the outstanding loan balance No additional loans can be taken out in the future The amount borrowed is added to the policyowner's gross income for tax purposes The interest on the loan is tax-deductible
The death benefit would be reduced by the outstanding loan balance
How may an insurance company classify an accidental death benefit on a life policy?As an optional policy rider As a provision of the policy As a nonforfeiture option As a mandatory policy rider
As an optional policy rider
The absolute assignment of a life insurance policy results inthe assignee receives all incidents of ownership the assignee receives partial incidents of ownership the transfer of ownership is revocable at the discretion of the original policyowner evidence of insurability must be proven before ownership is transferred
the assignee receives all incidents of ownership
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?Waiver of premium Automatic premium loan Reinstatement Policy loan
Automatic premium loan
Which life insurance settlement option pays a stated monthly payment until both principal and interest are exhausted? Fixed amount installment option Fixed period installment option Life income option Interest only option
Fixed amount installment option
A contingent beneficiary is described as theprimary person who receives the death benefits if the insured dies person who receives the death benefits if the primary beneficiary dies before the insured person who receives the death benefits if there is no named beneficiary person whose approval is needed before a beneficiary designation is changed
person who receives the death benefits if the primary beneficiary dies before the insured
How much is normally paid to a policyowner in a life (viatical) settlement?Total premiums paid plus interest Full face amount More than the face amount Less than the death benefit
Less than the death benefit
When premiums are calculated, one factor would be the expenses of thebeneficiary insurance company policyowner producer
insurance company
Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?The periodic payment amount is determined by the beneficiary's age The shorter the period of time, the larger each installment The longer the period of time, the smaller each installment The installment payments are composed of both principal and interest
The periodic payment amount is determined by the beneficiary's age
Kevin has an existing life insurance policy and assigns it to another insurer for a new contract. How would this transaction be treated for tax purposes? As a Section 1035 exchange As a transfer As a rollover As a Section 1040 exchange
As a Section 1035 exchange
Which of these is NOT an underwriting responsibility of a life insurance agent?Asking relevant questions concerning an applicant's avocations Requesting an attending physician's report (APR) Ordering an inspection report Determining the final rate classification
Determining the final rate classification
The interest paid during an annuity's payout period is considerednontaxable taxable as ordinary income taxable as capital gains tax-deductible
taxable as ordinary income
Interest is credited to a fixed annuity no lower than thevariable contract rate contract guaranteed rate current rate of inflation prime rate
contract guaranteed rate
An owner's cost basis for a non-qualified deferred annuity is typically the same as theannuity's cash value premiums paid into the annuity benefits payable to the annuitant interest earned within the annuity
premiums paid into the annuity
Which statement concerning a deferred annuity is correct? The contract cannot be assignable by the owner Requires a single premium payment The owner can be the beneficiary, annuitant, or neither Benefits start immediately after contract formation
The owner can be the beneficiary, annuitant, or neither
Which of the following normally pertains to an immediate annuity?Tax-free benefit payments Installment premium payments Lack of an accumulation period Lump-sum benefit
Lack of an accumulation period
Which of these annuity features is meant to discourage withdrawals and exchanges?Annuitization Annual fees Withdrawal penalty Surrender charges
Surrender charges
Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will discontinue after a stated number of years remain a constant dollar amount for the duration of the annuity period pay a lump sum if the annuitant dies vary according to the underlying investment performance
remain a constant dollar amount for the duration of the annuity period
A business may purchase an annuity for all of the following reasons EXCEPTStructuring a liability settlement payment Funding a non-qualified deferred compensation plan Accumulating assets on a tax-deferred basis Providing a pension to employees
Funding a non-qualified deferred compensation plan
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid mandatory income tax withholding on the amount transferred paying transfer fees paying trustee fees ever paying income taxes on the distributions
mandatory income tax withholding on the amount transferred