Annuities

Which of the following is NOT fundable by annuities?

Death benefits

What type of annuity can be purchased with a single premium and provides benefit payments immediately?

Immediate

Which of the following best describes a bail-out provision?

It allows the owner to surrender the annuity without a charge

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

Pay-in period

Annuities can be used to fund which of the following?

Retirement plans

Which of the following best describes what the annuity period is?

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

All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?

A 60-year-old man

If a person purchased a Flexible Premium Deferred Annuity, when is the soonest that income payouts will begin

After 1 year

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

Depreciation period

What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to a beneficiary?

Installment refund annuity

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

Installments for a fixed period

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT?

It is a life contingency option

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

It is a 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?

It would not occur in a deferred annuity

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?

Payment for 15 years

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person

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

The beneficiary

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?

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

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

They earn lower interest rates than fixed annuities

How long will a life annuity with an installment refund pay?

Until the balance of the initial premium is paid out in continued payments to the beneficiary after the annuitant dies

Which of the following products requires a securities license?

Variable annuity

An annuitant died after receiving $200 monthly for 10 years ($24,000 total) from a $30,000 installment refund annuity. His wife, as beneficiary, will now receive the same monthly benefit until her payments total

$6,000

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest rate is set at 2.5%. During an economic downsizing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?

2.5%

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

An index like Standard & Poor's 500

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

Annuitization period

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

Creating an estate

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called

Life income with period certain

Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?

No later than 1 year from the time of purchase

Equity indexed annuities

Seek higher returns

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?

The annuitant will receive the higher of either the guaranteed minimum rate or current rate

Which of the following is true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days

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

The insurance company's general account

Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?

The man's payments will be larger

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

The number of payments that purchase the annuity

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies

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

Annuitant

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

Which of the following is a true comparison between annuities and life insurance?

Both annuities and life insurance use mortality tables

Which of the following is a feature of a single premium immediate annuity?

Income payments start within one year