The 2-Minute FIA Quiz
- Results
1.)
B.
Monthly Cap, when a typical 2% cap is used. Increasing the cap to
3% reduces the number of zero years to 3.
2.) A.
Monthly average with a 1% spread. $10,000 deposited in an FIA
using this method in January 1970 would have grown to $17,082 by January of
1980. The same amount earning a fixed 5% rate would have grown to $16,289. Worst
performer? The 12% cap. It yielded just $15,692.
3.) D.
Over 3%. In this study of 16 popular credit methods, the best
credit method yielded an average annualized return of 7.17% and the worst credit
method's annualized return was 3.72%.
4.) A.
Annual point to point. This method behaves most like the index as
quoted in news sources. It can be a superior method when structured so no caps or fees are applied; instead the
participation rate is less than 100%. Only 5 carriers currently offer this
configuration.
5.)
B.
False. Although an upfront bonus may be a tempting way to recoup
losses realized in other investments, the trade off is usually reduced credit
method rates.
Interpreting Your Score:
1 - 2 Correct = This quiz was an eye-opener for you.
Credit method matters! You obviously care about what you recommend, so
educating yourself will go a long way with your clients. Start with
FIAnalyst-Lite or MCP Suite Basic.
2 - 4 Correct = Good job! You already know that certain
credit methods are better than others. You have already spent some time
researching these, but could benefit from a program that compares and presents
the differences. Try MCP Suite Basic or MCP Suite Professional.
4 - 5 Correct = Outstanding! You have a great grasp of
credit method structures and meeting client expectations. You are likely working
with high net worth clients and need detailed financial analysis that includes
the indexed annuity. See MCP Suite Professional.
