Annuities

What are accumulation units converted to upon annuitization of a Variable Annuity?

Annuity Units

In an annuity with installments for a fixed period of time, which of the following will an annuitant select?

Benefit period

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

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

When do annuity benefits have the least amount of purchasing power?

Inflation

What do annuity units represent?

Shares in an investment account that are invested in the stock market

Who can surrender a deferred annuity?

The annuity owner

Which of the following would reflect the effects of inflation the most?

variable

Barbara's annuity income payments are expected to begin after a year from the time she purchased her annuity. What type of annuity does this describe?

Deferred

Dan purchased a $50,000 annuity, and he began taking out payments within 3 months. What kind of annuity did Dan purchase?

Immediate

Mr. Wilson will be sent a check every month from the state, for the next 20 years, because he wont the lottery. What kind of investment is most likely used to fund his winnings?

Immediate Annuity

What kind of annuity will pay until the last named annuitant has died?

Joint and Survivor

Fixed annuities provide all of the following except: Future income payments equal monthly payments for life minimum guaranteed rate of interest a hedge against inflation with varying rates of return

A hedge against inflation with varying rates of return

Which type of annuity reflects varying economic and market conditions?

Variable

When does a Deferred Annuity pay a death benefit to the beneficiary?

When an annuitant dies before receiving any annuity payments

All of the following terms go together EXCEPT: annuitization period accumulation period liquidation period right pay-out period

accumulation period

Fixed annuities are supported by an insurer's ___________ account.

general

A predetermined percentage placed on an annuity surrendered prior to age 59 1/2 is called?

A surrender charge

If an annuitant chooses a lump-sum settlement at annuitization, which of the following taxes would be imposed?

Taxes on interest earned during its accumulation period

What is the advantage of having a qualified group annuity?

An employer receives a tax deduction for their contributions.

Allen died during the accumulation period of his annuity. Who will receive his benefits?

beneficiary

If life insurance is used to protect individuals against premature death, what is used to protect individuals against the risk of living too long?

An annuity

Which of the following describes the income in a Straight Life Annuity?

It is paid during an annuitant's lifetime with no refund upon his or her death.

All of the following except _______________ are uses for a deferred annuity? education funding an IRA creating an estate retirement

creating an estate

Bill's annuity is used to accumulate funds in his IRA. What feature must his annuity have in this situation?

tax qualified

What is the penalty Mary Jane must pay if she surrenders her annuity prior to her attaining the age of 59 1/2?

ten percent

Bill has a Variable Annuity with XNY company. Who bears the investment risks regarding the policy?

Bill

George is a 32 year old business man that wants to make sure that his lifestyle will not change when he retires. Which of the following would help George accomplish this goal?

An annuity

Under a Straight Life Annuity, if an annuitant dies before the principal amount is paid out, the beneficiary will receive which of the following?

Nothing; the payments will cease