Annuities 2/2

When a fixed annuity owner pays a monthly annuity premium to the insurance company , where is the money placed?

The insurance company's general account

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

1. Both are considered to be more risky than variable annuities.- 2. They invest on a conservative basis.- 3. They have a guaranteed minimum interest rate.+ 4. They are both ties to an equity index.-

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

1. Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount.- 2. Amount paid into the plan.- 3. Cash value of the plan- 4. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.+

According to the nonforfeiture law, if the owner decides to surrender a differed annuity prior to the annuitization, the owner is entitled to which of the following?

1. Full premium refund without any chargers.- 2. Guaranteed surrender value.+ 3. No payments.- 4. Annuity dividends.-

Under which of the following annuity option does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?

1. Installments for a fixed amount.- 2. Installment refund.- 3. Cash refund.- 4. Installments for a fixed period.+ *Under the "installments for a fixed period" option, the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be. This option pays for a specific period of time only, and there are no life contingencies.*

Which of the following is TRUE regarding the annuity period?

1. It is also referred to as the accumulation period.- 2. It is the period of time during which the annuitant makes premium payments into the annuity.- 3. It may last for the lifetime of the annuitant.+ 4. During this period of time the annuity payments grow interest tax deferred.-

Which of the following is TRUE regarding the accumulation period of an annuity?

1. It is also referred to as the annuity period.- 2. It is a period of time during which the beneficiary receives income.- 3. It is limited to 10 years.- 4. It is the period during which the payments into the annuity grow tax deferred.+

Which of the following is NOT true regarding the accumulation period of an annuity

1. It would not occur in a deferred annuity.+ 2. It is the period during which the annuity payments earn interest.- 3. It is the period over which the owner makes payments into an annuity.- 4. It is also known as eh pay-in period.-

Which of the following can surrender a differed annuity contract?

1. A deferred annuity cannot be surrendered.- 2. Only the annuity owner.+ 3. Only the insurance company for nonpayment of premiums.- 4. The beneficiary after the owner's death.-

Which of the following will NOT be an appropriate use of a deferred annuity?

1. Accumulating retirement funds.- 2. Accumulating Funds in an IRA.- 3. Funding a child's college education.- 4. Creating an estate.+

Which of the following is NOT a term for the period of time during which the annuitant of the beneficiary receives income?

1. Liquidation period.- 2. Depreciation period.+ 3. Annuitization period.- 4. Pay-out period.-

Which of the following is another term for the accumulation period of an annuity?

1. Premium period.- 2. Liquidation period.- 3. Annuity period.- 4. Pay-in period.+

If a differed annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?

It is a percentage of the cash value and decreases over time.

A couple receives a set amount of income from their annuity. When the wife dies, the husband no long receives annuity payments. What type of annuity did the couple buy?

Joint Life

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. what settlement option did they select?

Joint and Survivor

Equity Index Annuities

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After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?

Surrender charge

What happens if a deferred annuity is surrendered before the annuitization period

1. The insurer can only apply the surrender value toward another annuity.- 2. Deferred annuities cannot be surrendered prior to the annuitization period.- 3. The owner will receive the surrender value of the annuity.+ 4. The owner will only receive a refund of premium.-

Which of the following is NOT true regarding Equity Index Annuities?

1. They earn lower interest rates than fixed annuities.+ 2. The insurance company keeps a percentage of the returns.- 3. They have guaranteed minimum interest rates.- 4. They are less risky than variable annuities.-

An insurance company forewords fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investment only drew2%. what interest rate will the insurer pay to its policyholder?

2.5%

The minimum interest rate on an equity index annuity is often based on

An index like Standard & Poor's 500

When a annuity is written, whose life expectancy is taken into account?

Annuitant