Annuities

Equity indexed annuities are invested in which of the following Insurer's general account Savings bonds Insured's general account S&P 500

S&P 500

Which of the following is NOT included in an annuity contract? Nonforfeiture benefit Free-Look period Beneficiary AD&D rider

AD&D rider

What is considered to be a characteristic of an immediate annuity? Benefit payments start within one payment period of purchase Benefit payments start within 5 years of initial purchase Normally tied to a specific equity or stock index Periodical contributions begin immediately

benefit payments start within one payment period of purchase

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? Immediate Retroactive Deferred Universal

deferred

Which of these statements concerning an Individual Straight Life annuity is accurate? Life expectancy of the annuitant is not a factor The payments are received tax-free Only available to employees of nonprofit charitable, educational, and religious organizations Payments are made to an annuitant for life

payments are made to an annuitant for life

An immediate annuity consists of a variable premium flexible premium single premium deferred premium

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? 403(b) Plan Deferred Premium Single Premium Period Certain

single premium immediate annuity

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n) Cash Refund Installment Refund Straight Life annuity Life Annuity with Period Certain

straight life annuity

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives No refund of money The contract surrender value at that time All premiums paid up to the date of termination Reimbursement of all expenses deducted from the contract value

the contract surrender value at that time

Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT? The income from the TSA is received income tax-free The amount contributed is deductible from taxable income The interest earnings are tax deferred A tax-sheltered annuity is available to employees of non-profit organizations

the income from the TSA is received income tax-free

An individual who purchases a Life annuity is given protection against inflation the risk of dying prematurely the risk of living longer than expected the risk of not having enough retirement income

the risk of living longer than expected

Which of the following is a characteristic of a variable annuity? Underlying equity investments Does not have surrender chargers Does not provide a transfer of ownership Selling this product requires only a life license

underlying equity investments

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

variable

Which of the following annuities pays benefits based on units rather than specific dollar amounts? A Flexible annuity A Variable annuity A Deferred annuity A Single Premium annuity

a variable 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 straight life deffered annuity A straight life annuity An immediate annuity A deferred annuity

an immediate 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 An installment Refund annuity A Straight Life annuity A Cash Refund annuity A Joint Life annuity

an installment refund annuity - not cash refund bc payments are made versus a lump sum payment

Which type of contract liquidates an estate through recurrent payments? Universal life insurance Whole life insurance Annuity 401(k)

annuity

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 Does not have to make any further payments Must continue to make monthly payments to G's beneficiary for the rest of the beneficiary's life Must pay G's beneficiary the difference between the amount paid to G and $50,000 in a lump sum Must continue to make monthly payments to G's beneficiary until the difference between the amount paid to G and $50,000 is paid out

does not have to make any further payments

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? Fixed Period Fixed Deferred Fixed Immediate Fixed Variable

fixed deferred - acquired for the income at future date

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

flexible installment deferred

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) Flexible Premium Deferred annuity Variable annuity Immediate annuity Straight Life annuity

immediate annuity

The type of annuity that can be purchased with one monetary deposit is called a(n) Single Deposit annuity Single Premium annuity Fixed annuity Immediate annuity

immediate annuity - purchased with one lump-sum payment

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? Income for a fixed period stated in the contract Income that cannot be outlived by the owner Inflation protection Tax-free income

income that cannot be outlived by the owner (insured)

How does an indexed annuity differ from a fixed annuity? Fixed annuity owners receive credited interest tied to the fluctuations of the linked index Indexed annuity owners receive credited interest tied to the fluctuations of the linked index Fixed annuity owners have a separate investment account Indexed annuity owners receive annual dividends

indexed annuity owners receive credited interest tied to the fluctuations of the linked index

Variable annuities may invest premiums in each of the following EXCEPT Common Stock Money Market securities Insurer's corporate business account Junk bonds

insurer's corporate business account

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? Fixed Certain Joint and Full Survivor Life Annuity with Period Certain Installment Refund

life annuity with period certain - designed in contract to provide income for beneficiary for fixed period

Which of these is an element of a Single Premium annuity? Deferred payment Lump-sum payment Fixed income Tax-deductible

lump-sum payment