Annuities

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

Straight Life annuity

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible deferred installment

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners receive credit interest tied to the fluctuations of the linked index

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?

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?

Fixed Deferred

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

Income that can not be outlived by the owner

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?

Single Premium

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

The risk of living longer than expected

A contract owner terminates an annuity before the income payment period begins. The owner will then receive?

the current contract surrender value

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

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

Variable

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

Benefit payments start within one payment period of purchase

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

Does not have to make any further payments

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

Lump-sum payment

An immediate annuity consist of a:

Single Premium

What is the basic function of an annuity?

The systematic liquidation of accumulated funds

A variable Annuity has which of the following characteristics?

Underlying equity investments

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)

installment refund annuity