Variable Annuities Exam Test Updated

Assumed Interest Rate (AIR) {Ans: Rate of growth built into an annuity table which determines payout on a variable annuity; forms the basis for an initial annuity pmt as well as a "floor" from which to measure gain}Accumulation Units {Ans: premiums an annuitant pays into a variable annuity are credited as ______. At the end of the accumulation period accumulation units are converted to annuity units.}charges deducted from the separate account include the following: {Ans: -mortality expense (cost of insurance) -expense risk fee -investment mgt fee}Section 457 Plans {Ans: -deferred compensation plan (yearly deduction for deferred amount) -for employees of state, political subdivision of state, and any agency of a state -also allowed for hospitals, charities, unions etc -NOT allowed for churches Key Points: -exempt from ERISA, no NDR -Tax-exempt organizations: only highly compensated persons -Governmental: any employee/contractor may participate -distributions may NOT be rolled into an IRA -NO 10% early withdrawal penalty -Can have 457 and 403(b) and make max contr. to both -Loans only available to government plans, higher restrictions, not required to offer}guaranteed minimum income benefit {Ans: variable annuity guaranteed life benefit that ensures a minimum amount will be available to convert