Annuities

An immediate annuity has been purchased with a single premium. When does the annuitant typically being receiving benefit payments?

1 month

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? Payout period Accumulation period Deferred period Growth period

Accumulation period

When does an immediate annuity begin making payments? After multiple premiums have been paid After the first premium has been paid After policy has been active for one year After the incontestable period

After the first premium has been paid

What is the nonforfeiture value of an annuity before annuitization?

All premiums paid, plus interest, minus any withdrawals and surrender changes

Which of these is NOT considered to be a purpose of an annuity?

Annuities are intended to create an estate

Which of these is NOT considered to be a purpose of an annuity? Annuities are intended to create an estate Annuities are intended to liquidate an estate Annuities are intended for the tax-free growth of principal Annuities are intended to distribute accumulated principal

Annuities are intended to create an estate

Which of the following is considered to be the period when the accumulated value in an annuity is paid out? Annuitization Phase Accumulation Phase Principal Phase Period Certain Phase

Annuitization Phase

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? Payments cease 5 years after the annuitants death During periods of inflation, annuitants will experience an increase in purchasing power of their payments During periods of inflation, annuitants will experience a decrease in purchasing power of their payments Payment amounts can be unpredictable from month to month

During periods of inflation, annuitants will experience a decrease in purchasing power of their payments

Which of the following is an annuity that is linked to a market-related index? Market-related annuity Equity-indexed annuity Deferred-risk annuity Fixed-amount annuity

Equity-indexed annuity

How are annuities given favorable tax treatment?

Gains are taxed at distribution

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose? Accelerated lifetime benefit Guaranteed lifetime withdrawal benefit Right of Income Rider Guaranteed minimum accumulation benefit

Guaranteed lifetime withdrawal benefit

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?

Life Annuity Certain

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life income

Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments?

Period Certain

During the accumulation period, who can surrender an annuity?

Policyowner

An annuity dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made?

Refund Annuity

Which market index is normally associated with an indexed annuity's rate of return? NAIC SEC S & P 500 A & P 300

S & P 500

Which of these will have the highest monthly payout upon annuitization? Life with period certain Joint and survivor life straight life joint life

Straight Life

Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?

Temporary annuity certain

Which of these statements regarding the annuitant is CORRECT? The contract can only be assigned by the annuitant The annuitant is the only individual who can surrender the contract The annuitant must also be the beneficiary The annuitant's life expectancy determines the annuity payments

The annuitant's life expectancy determines the annuity payments

Who assumes the investment risk with a fixed annuity contract? The Owner The Annuitant The Insurer The Beneficiary

The insurer

Fixed period settlement options are considered to be a form of a

annuity

Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called

annuity certain

The taxable portion of each annuity payment is calculated using which method?

exclusion ratio

Under a non-qualified annuity, interest is taxed after the

exclusion ratio has been calculated

Which of these annuities require premium payments that vary from year to year? Flexible premium immediate annuity Flexible premium deferred annuity fixed premium deferred annuity fixed premium immediate annuity

flexible premium deferred annuity

An annuitant is guaranteed to NOT outlive their benefits with a(n)

guaranteed lifetime withdrawal benefits

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's

income period

What happens to interest earned if the annuitant dies before the payout start date?

it is taxable

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies? Life only life with period certain cash refund installment refund

life only

What is the primary reason for buying an annuity?

provide future economic security

An annuity is primarily used to provide

retirement income

How do interest earnings accumulate in a deferred annuity?

tax-deferred basis

What will the beneficiary receive if an annuitant dies during the accumulation period?

the greater of the accumulated cash value or the total premium paid

If the annuitant dies before the annuity start date,

the premiums paid plus interest earned will be given to the beneficiary