Annuities

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set 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 & Pope's 500

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

Annuitant

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

Creating an estate

Which of the following is NOT findable by annuities?

Death benefits

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

Depreciation period

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

Immediate annuity(With an immediate annuity, distribution starts with 1 year of purchase)

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

Income Payments Start with one one year

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

Income payments start within one year.

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

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

You 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.

Annuities can be used to fund which of the following?

Retirement Plans

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?

The insurance company's general account

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

They have a guaranteed minimum interest rate.

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?

payments for 15 years

An annuitant died 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 (with the installment refund annuity option, when the annuitant dies, the beneficiary continuously receive guaranteed installments until paid out

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

Annuitization Period