Ch. 7 - Annuities

Which type of contract liquidates and estate through recurrent payments?

Annuity.

G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer

Does not have to make any further payments

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

The type of annuity that can be purchased with one monetary deposit is called a(n)

Immediate annuity

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners receive credited interest tied to the fluctuations of the linked index

Which of the following annuities pays benefits based on units rather than specific dollar amounts?

A Variable annuity

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called

An installment Refund annuity

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life.