8- Annuities

How soon can the benefit payments begin with a deferred annuity?

A minimum of 12 months after date of purchase

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in?

Accumulation period

When does an immediate annuity begin making payments?

After the first premium has been paid

What happens to interest earned if the annuitant dies before the payout start date?

It is taxable

Who assumes the investment risk with a fixed annuity contract?

The Insurer

During the accumulation period, who can surrender an annuity?

The Policy Owner

Fixed period settlement options are considered to be a form of a(n)

annuity

Under a non-qualified annuity, interest is taxed after the

exclusion ratio has been calculated

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity?

During periods of inflation, annuitants will experience a decrease in purchasing power of their payments

Which of the following is an annuity that is linked to a market-related index?

Equity-indexed annuity

The taxable portion of each annuity payment is calculated using which method?

Exclusion Ratio

Which of the following is considered to be the period when the accumulated value in an annuity is paid out?

Annuitization phase

An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?

1 month

Which of these annuities require premium payments that vary from year to year?

Flexible premium deferred annuity

Which type of annuity stops all payments upon the death of the annuitant?

Life annuity

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?

Life annuity certain

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life income

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies?

Life only

How do interest earnings accumulate in a deferred annuity?

On a tax-deferred basis

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made?

Refund annuity

Which market index is normally associated with an indexed annuity's rate of return?

S & P 500

Which of these will have the highest monthly payout upon annuitization?

Straight life

An annuity is primarily used to provide?

retirement income

If the annuitant dies before the annuity start date,

the premiums paid plus interest earned will be given to the beneficiary