7.) Annuities Review

S&P 500

Equity indexed annuities are invested in which of the following:

Does not have to make any further payments

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:

Indexed annuity owners receive credited 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:

Benefit payments start within one payment period of purchase

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

Variable

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

Variable annuity

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

AD&D rider

Which of the following is NOT included in an annuity contract? A.) Nonforfeiture benefit, B.) Free look period, C.) Beneficiary, D.) AD&D rider

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? A.) The income from the TSA is received income tax-free, B.) The amount contributed is deductible from taxable income, C.) The interest earnings are tax deferred, D.)A tax-sheltered annuity is available to employees of non-profit organizations

Lump-sum payment

Which of these is an element of a Single Premium annuity?

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?

Life Annuity with Period Certain

annuity that guarantees an income payment for the rest of life.

Fixed Deferred

pays out a fixed amount for life starting at a future date.

Straight Life Annuity

the insurer does not have to make further payments after the annuities dies.

Flexible Installment Deferred Annuity

making payments in an amount no less than $100 quarterly is an example of

Immediate annuity

start providing income payments usually starting within 30 days from the purchase date.

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:

single premium

An immediate annuity consists of a:

the risk of living longer than expected

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

Flexible Installment Deferred

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? A.) A straight life deferred annuity, B.) A straight life annuity C.) An immediate annuity, D.) A deferred annuity

Deferred

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P 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?

Life Annuity with Period certain

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Income that cannot be outlived by the owner

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

Straight Life annuity

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n):

Immediate annuity

The type of annuity that can be purchased with one monetary deposit is called

Insurer's corporate business account

Variable annuities may invest premiums in each of the following, EXCEPT: A.) Common Stock, B.) Money Market Securities, C.) Insurer's corporate business account, D.) Junk bonds

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.) Flexible Premium Deferred annuity, B.) Variable Annuity, C.) Immediate annuity, D) Straight life annuity