Annuities

A Life annuity feature which provides benefit payments fro a min # of years, no matter when the annuitant dies, is called

Period certain; a life annuity feature which provides benefit payments for a min number of years, no matter when the annuitant dies, is called period certain

Which benefits can be found in an equity indexed annuity, but not in a fixed annuity

Protection against long term inflation, an equity indexed annuity is tied to an equity index such as the S&P 500 but also provides a guaranteed min interest rate. It gives the annuitant the opportunity to beat the rate of inflation

Which of the following would most likely purchase an immediate annuity?

Retiree having a lump sum to invest

An insurer will typically asses a back-end load on a deffered annuity that is contract years. what is this back-end load refereed to as?

Surrender charge. when a deferred annuity is cancelled during the early contract years, the insurer normally will assess a back-end load know as a surrender charge.

When a sum of money undergoes capital liquidation, that sum will

decrease in size

Which of these pays an income to 2 or more annuitant until death of the last annuitant

joint and survivor ship annuity

During an annuity liquidation phase, the annuitant normally

received payments at regular intervals during liquidation phase of annuity

Which statement concerning a deferred annuity contract is correct?

the owner may be the annuitant, beneficiary, or neither in a differed annuity

Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)

Annual investment gains are included in participants gross income. the investment gain are actually deffered in a tax sheltered annuity. Normally used by charitable, educational, and religious organizations, also known as 403(B) plans, participants make payments from salary reductions

During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?

Annuitant; the income benefits distributed during the liquidation phase of an annuity contract are normally payable to the annuitant

Which of the following is NOT a valid contract exchange?

Can annuity exchange for another annuity. A LI policy exchange for another LI policy or another annuity. Can NOT exchange annuity for a LI policy the 1035 exchange does not allow for an annuity to be exchanged for a LI policy. this is not considered an equal exchange and will be taxed

Taking a sum of money an decreasing it in size is called

Capital liquidation creates a situation in which a sum of money decreases in size

Interest is credited to a fixed annuity no lower than the

Contract guaranteed rate

The main purpose of annuity is to

Create a stream of income

A retired couple would like to maximize the income derived from their combined life savings and have it payable until thy both die. which annuity would be their best decision?

Joint AND survisor anuity. covers 2 or more lives and continues in force so long as any one of them survives