Unit 8

James died after receiving $180 monthly for six years from a $25,000 installment refund annuity. his wife Lucy, as beneficiary, now will receive the same monthly income until her payments total

$12,040

Before he died, Gary received a total of $9200 in monthly income payments from his $15,000 straight life annuity. he also was the insured under a $25,000 life insurance policy. the name to his wife, Darlene, as primary beneficiary. considering the two contracts, Darlene would receive death benefits totally

$25,000

When a cash value life insurance policy is converted into an annuity in a non-taxable transaction, that event is generally known as

A 1035 exchange

Albert has purchased an annuity that will pay him monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select?

A cash refund

Joanna and her husband Tom have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. when Joanna dies the annuity payments cease. this is an example of

A joint and full survivor annuity

Which of the following statements regarding equity index contract factors is most CORRECT?

Cash values of equity index contracts usually grow at a minimum interest rate

"Annuity payments are taxable to the extent that they represent interest earned rather than capital returned." when an annuitized payout option is chosen, what method is used to determine in the taxable portion of each payment?

Exclusion ratio

All of the following statements regarding annuities are correct EXCEPT

Generally, annuity contracts issued today require fixed, level funding payments

Which of the following statements regarding annuity payout options is NOT correct?

In a cash refund annuity, the annuitant's beneficiary always receives an amount equal to the beginning annuity fund plus all interest

What annuity payout option provides for lifetime payments to the annuitant but guarantees a certain minimum term of payments, whether or not the annuitant is living?

Life with period certain

Which of the following statements best describes equity index contracts?

Most of the investments backing equity index contracts are similar to those for non indexed contracts

All of the following statements about variable annuities are correct EXCEPT

Once a variable annuity has been annuitized the amount of monthly annuity income cannot fluctuate