Chapter Exam- Annuities

An installment Refund 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:

The risk of living longer than expected

An individual who purchases a Life annuity is given protection against:

S&P 500

Equity indexed annuities are invested in which of the following:

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

How does an indexed annuity differ from a fixed annuity

The contract surrender value at that time

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

Flexible Installment Deffered

N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities?

Fixed Deferred

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?

An immediate annuity

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?

Deferred

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay retirement payments after the 15 years. Which type of annuity did P purchase?

Single Premium

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 ?

Immediate Annuity

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

Immediate Annuity

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):

Underlying equity investments

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

The income from the TSA is received income tax-free

Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT?

Payments are made to an annuitant for life

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

Annuity

Which type of contract liquidates an estate through recurrent payments?