Chapter Exam - Annuities

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 (is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase)

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

Lump-sum payment (is required for a single premium annuity)

Equity indexed annuities are invested in which of the following:

S&P 500 (An indeed annuity is a type of tax-deferred annuity whose credited interest is linked to an equity index - typically the S&P 500)

An immediate annuity consists of a:

Single Premium (An immediate annuity has a single premium)

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives:

The contract surrender value at that time (If an annuity is terminated prior to beginning of the income payment period, the contract owner receives the contract surrender value at the time)

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. this type of annuity is called:

An installment refund annuity (promises that if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contact value has been paid.)

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 are 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)

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

The risk of living longer than expected (A life annuity offers protection against the risk of living longer than anticipated.)

Which of the following annuities pays benefits based on units rather than specific dollar amounts?

A variable annuity (A variable annuity pays benefits based on units rather than specific dollar amounts)

Which of the following is NOT included in an annuity contract?

AD&D rider (All of these are included in an annuity contract EXCEPT an Accidental Death & Dismemberment (AD&D) rider.)