Question

Mr. Smith is a 50 year old client of Bob, who is a registered representative. Bob is trying to get Mr. Smith to purchase a non-qualified Deferred Variable Annuity offered by his company. In making this recommendation to Mr. Smith, Bob should first be sure that:______.

[A] The variable annuity has a death benefit associated with it.
[B] Mr. Smith has already made his maximum contributions into his before-tax retirement plans.
[C] Mr. Smith plans to retire prior to the completion of the surrender period.
[D] The variable annuity has a fixed annuity payment at the time Mr. Smith retires.

Answer 1

Answer is B. Mr. Smith has already made his maximum contributions into his before-tax retirement plans.

Refer below.

Step-by-step explanation:

Mr. Smith is a 50 year old client of Bob, who is a registered representative. Bob is trying to get Mr. Smith to purchase a non-qualified Deferred Variable Annuity offered by his company. In making this recommendation to Mr. Smith, Bob should first be sure that:

Mr. Smith has already made his maximum contributions into his before-tax retirement plans.

Answer 2

[B] Mr. Smith has already made his maximum contributions into his before-tax retirement plans.

Step-by-step explanation:

Because before-tax benefits are not offered by non quantified Variable Annuities, It is necessary to ensure that maximum contributions into the before-tax retirement plans are made by the customer.

Note that, a variable annuity is a subset of the annuity contract. It is the value that vary depending on the performance of funds. A deferred annuity is considered the most preferred form of variable annuity.