Practice Quiz

FINRA Series 6

Category - Series 6

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Mr. Fast Lane met an early death at the age of 42. Mr. Lane had been making contributions to a variable annuity contract for several years, and at the time of his death, his contributions totaled $25,000.Although the value of the contract had at one time reached $40,000, earnings included, a downturn in the market has resulted in a contract value of only $23,000.How much will Mr. Lane’s beneficiaries receive as the death benefit associated with this contract under these circumstances?
  1. nothing, since the contract now has a value that is less than Mr. Lane’s total contributions
  2. the average of what its value once was and what it is today: $31,500
  3. $25,000
  4. $23,000
Explanation
Answer: C - Since Mr. Lane died while he was still making contributions, his beneficiaries will receive $25,000. If the annuitant dies during the accumulation period, the death benefit is equal to the value of the contract or the total of the contributions, whichever is greater.
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