Chapter 7 cram questions
Which of the following is not included in an annuity contract?
AD&D rider
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
What type of annuity has a cash value that is based upon the performance of its underlying investment funds?
variable
A 45 year-old woman won $100,000 And a scratch off lottery ticket. She purchased an annuity that will pay her $1500 per month beginning at age 60 which of these annuities did this woman purchase?
A deferred fixed annuity
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
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
An individual who purchases a life annuity is given protection against
the risk of living longer than expected
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?
An immediate annuity
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
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
The payment on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?
Fixed installment deferred
The type of annuity that can be purchased with one monetary deposit is called a(n)
Immediate annuity
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)
Immediate annuity
All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT:
Income derived from the TSA is received income tax-free
T, age 70, withdrawals cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income that cannot be outlived by the owner
Variable annuities may invest premiums in each of the following, EXCEPT:
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?
Life Annuity with Period Certain
Which of these statements concerning an individual straight life annuity is accurate? Life expectancy of an annuitant is not a factor The payments Are received tax free Only available to employees of nonprofit charitable, educational, and religious organization Payments are made to an annuitant for life
Payments are made to an annuitant for life
Which of the following are equity indexed annuities is typically invested in? Corporate bonds Money market accounts Municipal bonds S&P 500
S&P 500 An indexed annuity as a type of a tax deferred annuity who's credited interest is linked to an equity index typically the S&P 500
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 Immediate annuities I purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.
K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?
Single premium immediate joint with survivor annuity
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life annuity
A variable annuity has which of the following characteristics?
Underlying equity investments
Which type of contract liquidates an estate through recurrent payments?
annuity
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
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
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
the current contract surrender value If an annuity is terminated prior to the beginning of the income payment., The contract owner received the contract surrender value at the time.
A(n) ___________ Annuity pays benefits based on units rather than stated dollar amounts.
variable