ANNUITIES

With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?

After more than 1 year.

Which of the following is a feature of a variable annuity?

Benefits payment amounts are not guaranteed

An agent selling variable annuities must be registered with

FINRA

Which of the following is true regarding variable annuities?

The annuitant assumes the risks on investment.

What type of annuity promises to pay to a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitants death?

Cash refund annuity

In reference to fixed annuities, what comprises most of a life insurance company's general account?

Conservative investments like bonds.

Not True regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

Accumulation period

also known as the pay-in period, is the period of time over which the owner makes payments into an annuity.

What type of annuity guarantees to pay income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to the beneficiary?

installment refund annuity

annuity

is a contract that provides income for a specified period of years, or for life. An annuity protects a person against outliving his or her money. Annuities are not life insurance, but rather a vehicle for the accumulation of money and the liquidation of an estate.

Deferred Annuities

is an annuity that either is purchased with a single lup sum or is purchased through periodic payments.

What type of annuity can be purchased with a single premium and provides benefits payments immediately?

Immediate

Equity indexed annuities

Seek higher returns.

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. he guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholder?

3%

In flexible premium payments plans, the term "flexible" refers to the

Amount of premium.

Ann is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return tha will equal the performance of the Standard and poors 500 index. She would likely purchase an

Equity Indexed Annuity

When a fixed annuity owner pays his/her insurance company a monthly premium, where is the money placed?

The insurance company's general account.

Annunity Period

also known as the annuitization period, liquidation period or pay out period, is the time during which the sum that has been accumulated during he accumulation period is converted into a stream of income payment to the annuitant.

Single Premium Immediate Annuity

is one that is purchased with a single, lump sum payment and provides income payments that start within 1 year from the date of purchase.

Fixed Annuity features

Guaranteed minimum rate of interest to be credited to the purchase payments Income payments that do not vary from one payment to the next The insurance company guarantees the specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant.

Variable annuity

serves as a hedge against inflation, and is variable from the standpoint that the annuitant may receive different rates of return on the funds that are paid into the annuity.

If a person purchases a flexible premium deferred annuity, when is the soonest that income payouts will begin?

After 1 year.

Which of the following products requires a securities license?

Variable annuity

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

Which of the following is true for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate

Indexed or equity indexed annuities

are fixed annuities that invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity the indexed annuity has a guaranteed minimum interest rate.

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

All of the following statements are true regarding installments for a fixed amunt except

The payments will stop when the annuitant dies.

What license or licenses are required to sell variable annuities?

Both Life insurance and securities licenses.

Variable annuity characteristics

1) Underlying Investment - the payments that annuitant makes into the varibe annuity are invested in the insurers separate account not their general account. 2)Interest Rates - issuing insurance company does not guarantee a minimum interest rate. 3) License Requirements - a variable annuity is considered a security and is regulated by the securities exchange commission in addition to state insurance regulations.