ch 5 quiz annuities

what form of annuity settlement options provides payments to an annuitant for the rest of the annuitants life and ceases at the annuitants death a.installment refund b.joint and survivor c.pure life d.life with guaranteed minimum

c.pure life

which of the following are not fund able by annuities a.death benefits b.cash accumlation for any reason c.a person's retirement d.estate liquidation

a.death benefits

before he died an annuitant had received 12,500 in monthly benefits from his 25,000 straight life annuity he was also the insured under a 50,000 paid up whole life policy that named his wife as primary beneficiary considering both contracts how much will the annuitant's spouse receive in benefits a.50,000 b.62,500 c.75,000 d.nothing

a.50,000

which of the following is not true about a group annuity a.it can be owned by individual employees b. it can be noncontributory c.it can be qualified d.it can be tax deferred

a.it can be owned by individual employees

which of the following is not true regarding the Life with Guaranteed Minimum annuity settlement option a.it provides a higher monthly benefit than a pure life annuity b.it is a life contingency option c.the beneficiary receives the remainder of the principal amount upon the annuitants death d.payments can be made in installments and as a single cash refund

a.it provides a higher monthly benefit than a pure life annuity

all of the following statements are true regarding installments for a fixed amount except a.the payments will stop when the annuitant dies b.value of the account and future earnings will determine the time period for the benefits c.this option pays a specific amount until the options are exhausted d.the annuitant will select how big the payments will be

a.the payments will stop when the annuitant dies

which of the following is true for both equity indexed annuities and fixed annuities a.they are both tied to an equity index b.both are considered to be more risky than variable annuities c.they invest on a conservative basis d.they have a guaranteed minimum interest rate

d.they have a guaranteed minimum interest rate

all of the following are true of an annuity owner except a.the owner has a right to name a beneficiary b.the owner is the party who may surrender the annuity c.the owner must be the party to receive benefits d.the owner pays the premiums on the annuity

c.the owner must be the party to receive benefits

if a deferred annuity is surrendered prematurely a surrender charge is imposed how is the surrender charge determined a.the surrender charge is a percentage of the cash value and decreases over time b.the surrender charge is always 7% of the cash value c.the surrender charge is a flat fee determined by the annuity owner when the annuity is purchased d.the surrender charge will increase as the accumulation phase increases

a.the surrender charge is a percentage of the cash value and decreases over time

which of the following best describes a pure life annuity settlement option a.pure life guarantees that all proceeds will be paid out b.benefits are paid out for a fixed period of time specified when the policy begins to pay c.pure life provides payments for as long as both the anniutant and the spouse are living d.pure life provides payments for as long as the annuitant is alive

d.pure life provides payments for as long as the annuitant is alive

which of the following is true regarding variable annuities a.the funds are invested in the company's general account b.the company guarantees a minimum interest rate c.a person selling variable annuities is required to have only a life agent license d.the annuitant assumes the risk on investment

d.the annuitant assumes the risk on investment

which of the following is another term for the accumlation period of an annuity a.annuity period b.pay in period c.premium period d.liquidation period

b.pay in period

if a beneficiary is not named for annuity benefits to which entity will the benefit be paid a.the state government b.the insurance company c.the annuitant's estate d.the next of kin

c.the annuitant's estate

an insurance company forwards fixed annuity premiums to their general account where the money is invested the guaranteed minimum interest is set to 2.5% during an economic downswing the investments only drew 2% what interest rate will the insurer pay to its policyholders a.2% b.2.5% c.3% d.whatever interest rate the company deems appropriate

b.2.5%

in reference to fixed annuities what comprises most of a life insurance company's general account a.S&P 500 index b.Conservative investment like bonds c.aggressive stocks and bonds d.Company Stock

b.Conservative investment like bonds

which of the following is not true regarding the accumulation period of an annuity a.it is also known as the pay-in period b.it would not occur in a deferred annuity c.it is the period during which the annuity payments can earn interest d.it is the period over which the annuitant makes payment into an annuity

b.it would not occur in a deferred annuity

which of the following ultimately determines the interest rates paid to the owner of a fixed annuity a.investment performance of the company b.investment performance of the insured c.statewide predetermined annual interest rate d.Insurer's guaranteed minimum rate of interest

d.Insurer's guaranteed minimum rate of interest

which of the following describes the difference between pure life and life with guaranteed minimum benefits settlement options a.in life with guaranteed minimum benefits payments can be made in installments b.pure life guarantees to pay out all the proceeds c.pure life is not a life contingency option d.life with guaranteed minimum will pay the remaining principal to the beneficiary

d.life with guaranteed minimum will pay the remaining principal to the beneficiary

which of the following describes what the annuity period is a.the period of time from the effective date of the contract to the date of its termination b.the period of time during which accumulated money is converted to income payments c.the period of time from the accumulation period to the annuitzation period d.the period of time during which money is accumulated in an annuity

b.the period of time during which accumulated money is converted to income payments

A deferred annuity is surrendered prior to annuitization which of the following best describes the non forfeiture value of the annuity a.the surrender value will not be more than 80% of the cash value in the annuity at the time of surrender b.the surrender value should be equal to 100% of the premium paid minus any prior withdrawals and surrender charges c.a deferred annuity cannot be surrendered prior to annuitazation the owner must wait until the annuitaztion period begins to receive any payments d. the surrender value will be based on current interest rates

b.the surrender value should be equal to 100% of the premium paid minus any prior withdrawals and surrender charges

the equity in an equity index annuity is linked to a.the annuitants individual stock portfolio b.the insurance company's general account investments c.an index like standard and poor 500 d.the returns from the insurance company separate account

c.an index like standard and poor 500

which of the following is true regarding the annuity period ? a.during this period of time the annuity payments grow interest tax deferred b.it is also referred to as the accumulation period c.it is the period of time during which the annuitant makes premium payments into the annuity d.it may last for the lifetime of the annuitant

d.it may last for the lifetime of the annuitant

an annuity owner is funding an annuity that will supplement her retirement because she does not know what effect inflation may have on her retirement dollars she would like a return that will equal the performance of the standard and poor 500 index she would likely purchase an a.equity indexed annuity b.variable annuity c.flexible annuity d.immediate annuity

a.equity indexed annuity

the president of a company is starting an annuity and decides that his corporation will be the annuitant which of the following statements is true ? a.a corporation can be an annuitant as long as the beneficiary is a natural person b.the contract can be issued without an annuitant c.the annuitant must be a natural person d. a corporation can be an annuitant as long as it also the owner

c.the annuitant must be a natural person

all of the following statements about equity index annuities are correct except a.they invest on a more aggressive basis aiming for higher returns b.the annuitant receives a fixed amount of return c.they have a guaranteed minimum interest rate d.the interest rate is tied to an index such as the Standard and Poor 500

b.the annuitant receives a fixed amount of return

in a fixed annuity which of the following is true regarding the guarantee interest rate on investment ? a.the annuitant will receive the higher of either the guaranteed minimum interest rate or the current rate b.the annuitant will always receive the current interest rate c.the annuitant will always receive the lower of either the guaranteed minimum rate or the current rate d.the annuitant will only receive the guaranteed minimum specified in the contract

a.the annuitant will receive the higher of either the guaranteed minimum interest rate or the current rate

if the annuitant dies during the accumlation period who will receive the annuity benefits ? a.estate b.beneficiary c.owner d.insurance company

b.beneficiary