Annuities

What are the two phases of an unnuity?

Accumulation and annuitization (or pay-in and pay-out)

In flexible premium payment annuities, the term "flexible"refers to what?

Amount of premium

Who receives income payments from an annuity?

Annuitant

Whose life expectancy is taken into consideration in an annuity contract?

Annuitant

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

Annuitant's estate

If the annuitant dies during the accumulation period, who will receive annuity benefits?

Beneficiary

What are the two types of refund life annuities?

Cash refund and installment refund

If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the annuity owner receive as part of the annuity payment?

Current

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Either the amount paid into the annuity or the cash value, whichever is greater

What type of annuity credits its interest based on an index such as S&P 500?

Equity indexed annuity

An annuity purchased with multiple payments that begins income payments after one year from the moment of purchase is known as what type of annuity?

Flexible premium deferred annuity

What are the two classifications of annuities according to the time when annuity payments begin?

Immediate and deferred

What type of annuity can be purchased with a single premium?

Immediate annuity

If an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?

Joint life annuity

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?

Life income with period certain

What types of license(s) is/are required in order to sell variable annuities?

Life insurance license and a securities license

What are accumulation units in annuities?

Ownership interest in the separate account (instead of buying shares, annuity holder purchases accumulation units)

How are annuities classified depending on how many lives they cover?

Single life and multiple annuities

Rgarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?

The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant's death

What is the difference between a single premium and a flexible premium payment options in a deferred annuity?

The number of payments that purchase the annuity

Who bears the investment risk in a fixed annuity?

Thee insurer

What is the main reason for purchasing an annuity?

To provide income that the annuitant cannot outlive

What is a disadvantage of owning a fixed annuity, as opposed to variable?

in times of inflation, the benefit of a fixed annuity will have decreased purchasing power

In an annuity, the accumulated money is converted into a stream of income during which phase?

Annuitization period

An individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does this person have?

Annuity

Who possesses all the rights in an annuity?

Annuity owner

How long will a life annuity with a 15-year period certain pay?

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years.

Ho soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

With a single premium deferred annuity, when will the annuity payments become available?

No sooner than 1 year after the annuity puchase

Can a business or a corporation be an annuitant?

No, an annuitant must always be a natural person

How long is income paid under a pure life annuity?

Only for the life of the annuitant

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and ceases at the annuitant's death?

Pure life

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annitant lives?

Straight life

What causes a variable annuity benefit to vary?

The annuity's underlying investments

What type of annuity requires an agent to have a securities license?

Variable annuity