10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The CAS exam has 150 questions and runs 3 hours.
These 10 free CAS questions are organized by exam domain, so you can see how each part of the Certified Addiction Specialist blueprint is tested. Reveal the answer and explanation under each question.
A retired couple has a fixed premium budget for an immediate annuity. After allowing for their other income, they need at least $2,200 monthly while both are alive and $1,700 monthly for either survivor's remaining lifetime. Each quote below uses the entire premium budget. Which quote meets both income requirements?
Correct answer: C - Joint life with 75% survivor income: $2,400 monthly while both live, then $1,800 for the survivor's life.
'An annuity inside an IRA is redundant, so we should reject it,' says an adviser reviewing a proposed variable annuity purchase. The client is specifically seeking lifetime withdrawal protection, not another tax deduction. The IRA consists entirely of pretax funds. How should the review distinguish tax treatment from the insurance decision?
Correct answer: B - The IRA already supplies tax deferral; assess whether the insurance benefits justify the annuity's costs and restrictions.
A 54-year-old takes an $80,000 partial withdrawal from a personally owned nonqualified deferred annuity purchased with after-tax money in 2018. Immediately before withdrawal, its account value is $240,000 and its investment in the contract is $180,000. The contract has not been annuitized. The insurer waives its surrender charge, but no exception to the federal additional tax on early distributions applies. Identify the ordinary-income amount and the additional federal tax, respectively.
Correct answer: D - $60,000 of ordinary income and $6,000 of additional tax.
A fixed-rate annuity's accumulation value has continued to earn the promised rate, but its early-surrender quote is lower than account value even after the separately listed surrender charge is allowed for. Market interest rates have risen sharply since issue. The contract has no premium bonus or optional riders, and the quote is before tax withholding. What most plausibly explains the additional reduction?
Correct answer: A - A negative market value adjustment tied to prevailing interest rates.
The owner of a nonqualified annuity with an unrealized gain surrenders the contract. The insurer sends a check payable to the owner, who endorses it to another insurer that same day to buy a new nonqualified annuity. Ownership is unchanged, but no direct exchange or assignment of the original contract was arranged. Both contracts are outside retirement plans. How is the transaction treated for federal income-tax purposes?
Correct answer: A - The surrender recognizes the gain; endorsing the check does not establish a Section 1035 exchange.
For a completed one-year term, an index rose 9% on a price-only basis and 12% including dividends. Two fixed indexed annuity strategies both use the price-only return. The capped strategy applies 80% participation and then a 7% cap. The spread strategy applies 100% participation and then subtracts 3 percentage points, with no cap. Both have a 0% credit floor; there are no fees or withdrawals. A producer claims that the higher participation rate delivered more interest. Which comparison tests that claim correctly?
Correct answer: A - Capped: 7.0%; spread: 6.0%. The capped strategy credited more interest.
An investor wants variable-annuity subaccount exposure but needs a contractual minimum amount available as a lump sum on the tenth anniversary, even if the investments have lost value. She plans no withdrawals before that date and does not want to annuitize to obtain the guarantee. Her pension already meets her lifetime income needs. The rider that directly addresses this objective is a:
Correct answer: D - Guaranteed minimum accumulation benefit with a tenth-anniversary account-value guarantee.
During a fixed indexed annuity application meeting, a 79-year-old client repeatedly looks to her nephew before answering. He insists that nearly all her savings be committed today to secure a bonus. When the seven-year surrender schedule is explained, she says, 'I need this money for care next month, but he says I have to sign.' No application has been submitted. The firm's procedure directs suspected coercion to compliance for review. What should take priority now?
Correct answer: C - Pause the application, speak with the client privately, and document and report the concern to compliance.
After a first-year index decline, a fixed indexed annuity records a positive index change during year two, although the index remains below its level when the contract was purchased. The contract uses annual point-to-point crediting with an annual reset, 100% participation, a positive annual cap, no spread, and a 0% credit floor. There have been no withdrawals. Which index comparison governs the second-year credit?
Correct answer: B - The second anniversary's index level compared with the first anniversary's level.
Two retirement projections begin with the same portfolio and use exactly the same annual investment returns, but in reverse order. Both deduct the same fixed dollar withdrawal at each year-end, with no taxes or fees. Neither portfolio is depleted during the projection. The losses-first projection finishes with less money. Why can that result be valid despite the identical set of returns?
Correct answer: C - Withdrawals following early losses leave less capital invested to participate in the later recovery.
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