Annuities

Current

If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the annuity owner receive as part of the annuity payment?

No, an annuitant must always be a natural person

Can a business or corporation be an annuitant?

Beneficiary

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant's death

Regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?

Annuitant

Who receives income payments from an annuity?

C: Death benefit

The term "fixed" in a fixed annuity refers to all of the following EXCEPT A .Equal annuity payments B. Amount and length of payments C. Death benefit D. Guaranteed rate of interest

Single life and multiple life annuities

How are annuities classified depending on how many lives they cover?

Only for the life of the annuitant

How long is income paid under pure life annuity?

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years.

How long will a life annuity with a 15-year period certain pay?

No later than 1 year from the time of annuity purchase

How soon can income begin in an immediate annuity?

Joint Life Annuity

If an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?

Either the amount paid into the annuity or the cash value, whichever is greater

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

B. The beneficiary will receive the greater of the money paid into the annuity or the cash value.

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A.The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. B. The beneficiary will receive the greater of the money paid into the annuity or the cash value. C. The owner's estate will receive the money paid into the annuity. D. The insurance company will retain the cash value and pay back the premiums to the owner's estate.

Ownership interest in separate accounts (instead of buying shares, annuity holder purchases accumulation units)

What are accumulation units in annuities?

Accumulation and annuitization (or pay-in and pay-out)

What are the two phases of an annuity?

Cash refund and installment refund

What are the two types of refund life annuities?

The annuity's underlying investments

What causes a variable annuity benefit to vary?

In times of inflation, the benefit of a fixed annuity will have decreased purchasing power.

What is a disadvantage of owning a fixed annuity, as opposed to variable?

To provide income that the annuitant cannot outlive

What is the main reason for purchasing an annuity?

Immediate Annuity

What type of annuity can be purchased with a single premium?

C. Variable annuity

Which of the following products requires a securities license? A. Equity Indexed annuity B. Deferred annuity C. Variable annuity D. Fixed annuity

Annuity

An individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does this person have?

D. The cash value will be paid to the annuitant's estate.

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? A.The premium value will be paid to the annuitant's estate. B. All benefits will be forfeited. C. The cash value will be paid to the state government. D. The cash value will be paid to the annuitant's estate.

Pure Life

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?

Immediate and deferred

What are the two classifications of annuities according to the time when annuity payments begin?

A life insurance license and a securities license

What type of license(s) is/are required in order to sell variable annuities?

D. Depreciation period

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? A. Annuitization period B. Pay-out period C. Liquidation period D. Depreciation period

A. Death benefits

Which of the following is NOT fundable by annuities? A. Death benefits B. Cash accumulation for any reason C. A person's retirement D. Estate liquidation

The Insurer

Who bears the investment risk in a fixed annuity?

B. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

If an annuitant dies before annuitization occurs, what will the beneficiary receive? A. Cash value of the plan B. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount C .Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount D. Amount paid into the plan

Amount of premium

In flexible premium payment annuities, the term "flexible" refers to what?

B. The period of time during which accumulated money is converted into income payments

Which of the following best 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 into income payments C. The period of time from the accumulation period to the annuitization period D. The period of time during which money is accumulated in an annuity

C. Annuity certain

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? A. Refund life B. Variable annuity C. Annuity certain D. Fixed annuity

A. Straight life

Which of the following types of annuities will generally provide the highest monthly income? A. Straight life B. Joint and survivor C. Installment refund D. Life with a 10-year period certain

Annuity owner

Who possesses all the rights in an annuity?

Annuitant

Whose life expectancy is taken into consideration in an annuity contract?

No sooner than 1 year after the annuity purchase.

With a single premium deferred annuity, when will the annuity payment become available?

Annuitant's estate

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

Annuitization period

In an annuity, the accumulated money is converted into a stream of income during which phase?

B. Annuitization period

In an annuity, the accumulated money is converted into a stream of income during which time period? A. Conversion period B. Annuitization period odC. Payment period D. Amortization period

C. The owner must be the party to receive benefits.

All of the following are true of an annuity owner EXCEPT A. The owner has the right to name the 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.

Flexible Premium Deferred Annuity

An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuity?

D. It would not occur in a deferred annuity.

Which of the following is NOT true regarding the accumulation period of an annuity? A. It is the period during which the annuity payments earn interest. B. It is the period over which the owner makes payments into an annuity. C. It is also known as the pay-in period. D. It would not occur in a deferred annuity.

Equity Indexed Annuity

What type of annuity credits its interest based upon an index such as S&P 500?

Straight life

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

Variable Annuity

What type of annuity requires an agent to have a securities license?

D. Pure life provides payments for as long as the annuitant is alive.

Which of the following best describes a pure life annuity settlement option? A. Pure life guarantees that all the proceeds will be paid out. B. Benefits are paid for a fixed period of time, specified when the policy begins to pay. C. Pure life provides payments for as long as both the annuitant and the spouse are living. D. Pure life provides payments for as long as the annuitant is alive.

The number of payments that purchase the annuity

What is the difference between a single premium and a flexible premium payment options in a deferred annuity?

D. The annuitant cannot be the same person as the annuity owner.

Which of the following is NOT true regarding the annuitant? A. The annuitant's life expectancy is taken into consideration for the annuity. B. The annuitant receives the annuity benefits. C. The annuitant must be a natural person. D. The annuitant cannot be the same person as the annuity owner.