7-Annuities
Life Annuity with Period Certain
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?
common stock, money market securities, Junk bonds
Variable annuities may invest premiums in each of the following
Benefit payments start within one payment period of purchase
What is considered to be a characteristic of an immediate annuity?
Variable
What type of annuity has a cash value that is based upon the prefromance of it's underlying investment funds?
An installment Refund annuity
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
Fixed Deferred
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
pays out a fixed amount for life starting at a future date.
Straight life Annuity
provide an income that the owner cannot outlive.
the risk of living longer than expected
An individual who purchases a Life annuity is given protection against
S&P 500
Equity indexed annuities are invested in what?
The contract surrender value at that time
if an annuity is terminated prior to beginning of the income payment period, the contract owner receives:
Annuity
A contract that provides for the liquidation of all or part of an estate through periodic payments
single premium
An immediate annuity consist of a
Does not have to make any further payments
G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer
Does not have to make any further payments
G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving montly payments from the annuity. When G dies, the insurer:
Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
How does an indexed annuity differ from a fixed annuity?
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.
Deferred
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?
Straight Life Annuity
Pays for the life of the annuitant
Single Premium
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?
Income that cannot be outlived by the owner
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. Wha will this transaction provide?
Tax Sheltered Annuity (TSA)
The amount contributed is deductible from taxable income, The interest earnings are tax deferred, A tax-sheltered annuity is available to employees of non-profit organizations.
Payments are made to an annuitant for life
Which of these statements concerning an Individual Straight Life annuity is accurate?
Indexed annuity
is a type of tax-deferred annuity whose credited interest is linked to an equity index-typically the S&P 500.
Immediate Annuity
is purchase with one monetary deposit
Life Annuity
offers protection against the risk of living longer than anticipated
Straight Life Annuity
pays the largest monthly benefit to a single annuitant because it is based only on life expectancy, but it creates a risk that annuitant may die early and foreit much of the value of the annuity to the insurance company.
Immediate Annuity
start providing income payments within 30 days from the purchase date.
Flexible Installment Defered
N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuites?
straight life deffered annuity, straight life annuity, deffered annuity
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 buy?
Variable annuity, Flexible Premium Deferred annuity, Straight Life Annuity
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All these would be acceptable annuity choices,
Variable Annuity
Which of the following annuities pays benefits based on units rather than specific dollar amounts?
Underlying equity investments
Which of the following is a characteristic of a variable annuity?
Nonforfeiture benefit, Free-Look period, Beneficiary
Which of the following is included in an annuity contract?
Lump-sum payment
Which of these is an element of a Single Premium annuity?
Annuity
which type of contract liquidates an estate through recurrent payments?