CH. 8: Annuities (CH. Exam)
Guaranteed lifetime withdrawal benefit
An annuitant is guaranteed to NOT outlive their benefits with a(n) Survivorship clause Guaranteed lifetime withdrawal benefit Period certain provision Guaranteed minimum accumulation benefit
Straight life
Which of these will have the highest monthly payout upon annuitization? Life with period certain Joint and survivor life Straight life Joint life
Premiums paid plus interest earned is returned to the beneficiary
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement? Principal returned is taxable Benefits are still payable tax-free to the beneficiary Company retains entire cash value Premiums paid plus interest earned is returned to the beneficiary
During periods of inflation, annuitants will experience a decrease in purchasing power of their payments
Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? Payments cease 5 years after the annuitant's death During periods of inflation, annuitants will experience an increase in purchasing power of their payments During periods of inflation, annuitants will experience a decrease in purchasing power of their payments Payment amounts can be unpredictable from month to month
Annuity certain
Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called Variable payout Fixed accumulation Interest guaranteed Annuity certain
Exclusion Ratio
The taxable portion of each annuity payment is calculated using which method? Exclusion Ratio Taxable Ratio Cost Basis Tax Basis
Provide future economic security
What is the primary reason for buying an annuity? Provide tax-free income Provide a risky, yet high return investment Provide an instant estate Provide future economic security
After the first premium has been paid
When does an immediate annuity begin making payments? After multiple premiums have been paid After the first premium has been paid After policy has been active for one year After the incontestable period
Period certain
Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments? Period Certain Straight Life Installment refund Amount certain
S & P 500
Which market index is normally associated with an indexed annuity's rate of return? NAIC SEC S & P 500 A & P 300
On a tax-deferred basis
How do interest earnings accumulate in a deferred annuity? On a tax credit basis On a tax-deferred basis On a tax-free basis On a taxable basis
Life only
Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies? Life only Life with period certain Cash refund Installment refund
Equity-indexed annuity
Which of the following is an annuity that is linked to a market-related index? Market-related annuity Equity-indexed annuity Deferred-risk annuity Fixed-amount annuity
The annuitant's life expectancy determines the annuity payments
Which of these statements regarding the annuitant is CORRECT? The contract can only be assigned by the annuitant The annuitant is the only individual who can surrender the contract The annuitant must also be the beneficiary The annuitant's life expectancy determines the annuity payments
Life annuity certain
Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them? Life annuity certain Secure life annuity Irrevocable survivor annuity Guaranteed life annuity
