7 - Annuities

Variable annuities may invest premiums in each of the following EXCEPT?

Insurer's corporate business account.

P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?

An immediate annuity.

Equity indexed annuities are invested in which of the following?

S&P 500. (An indexed annuity is a type of tax-deferred annuity whose credited interest is linked to an equity index — typically the S&P 500.)

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deferred.(A Fixed Deferred annuity pays out a fixed amount for life starting at a future date.)

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)?

Immediate annuity. ( Immediate annuities start providing income payments usually starting within 30 days from the purchase date.)

An immediate annuity consists of a?

Single premium. (An immediate annuity has a single premium).

Which of the following is NOT included in an annuity contract?

AD&D rider. ( All of these are included in an annuity contract EXCEPT an Accidental Death & Dismemberment (AD&D) rider.

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium. (Immediate Annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.)

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives?

The contract surrender value at that time. (If an annuity is terminated prior to beginning of the income payment period, the contract owner receives the contract surrender value at that time.

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

Variable.(A variable annuity's cash value will depend on the results of its investment funds.)