Annuities / Life Insurance
equity indexed annuity
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 index. She would likely purchase a what?
a single premium
An immediate annuity is purchased with what?
payments for 15 years
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?
life expectancy of an annuitant
Annuities are based on what?
$50,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
mortality tables
Both annuities and life insurance use what tables to calculate?
paid into the annuity
During the accumulation period for annuity, what is happening to the funds?
paid out to the annuitant
During the annuity period, what is happening to the funds?
immediate or deferred
How can income payments be paid for annuities?
fixed or variable
How can premiums be invested for annuities?
is the period during which the payments into the annuity grow tax deferred
How does the accumulation period of an annuity work?
the annuitant's estate
If a beneficiary is not named for annuity benefits, to which entity will the benefit be paid?
joint life 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 what?
it is a percentage of the cash value and decreases over time
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
annuitization period
In an annuity, the accumulated money is converted into a stream of income during which time period?
general account
In fixed annuities, the premiums are deposited in the company's what?
amount of premium
In flexible premium payment annuities, the term flexible refers to what?
after 1 year
Income payments from a deferred annuity begin how long after the date of purchase?
life income with period certain
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 what?
lower
The longer the life expectancy for an annuitant, means the benefit will be what?
retirement
The main use of annuities is to provide what type of income?
an index like Standard & Poor's 500.
The minimum interest rate on an equity indexed annuity is often based on what?
higher
The shorter the life expectancy for an annuitant, means the benefit will be what?
only for the life of the annuitant
Under a pure life annuity, an income is payable by the company only for what?
fixed-period
What annuity plan pays for a specific time only, whether or not the annuitant is living?
pure life annuity
What annuity provides the highest monthly benefit, but there is no guarantee that the entire principal will be paid out?
pure life
What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and ceases at the annuitant's death?
immediate and deferred
What are the two classifications of annuities according to the time when annuity payments begin?
single premium or periodic
What are the two premium payment methods to fund an annuities?
cash refund and installment refund
What are the two types of refund life annuities?
it allows the owner to surrender the annuity without a charge
What best describes a bail-out provision for a annuity?
provides payments for as long as the annuitant is alive
What best describes a pure life annuity settlement option?
the period of time during which accumulated money is converted into income payments
What best describes what the annuity period is?
the current interest rate at the time of surrender
What determines the penalty for surrendering a market value adjusted annuity prematurely?
deferred annuities
What grows tax deferred, and are best suitable for accumulating retirement income or funds for children's college education?
the owner will receive the surrender value of the annuity
What happens if a deferred annuity is surrendered before the annuitization period?
it allows the owner to surrender the annuity without a charge
What is a bail out provision for an annuity?
the owner is guaranteed a fixed interest rate for a specific period of time
What is a market value adjusted annuity?
annuity certain
What is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?
the charge may be waived if the annuitant is confined to a long term care facility for at least 30 days
What is true regarding a waiver of a surrender charge on an annuity contract?
bail-out
What provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?
variable annuity
What type of annuity requires an agent to have a securities license?
the insurance company
Who bears all of the investment risk in a fixed annuity?
only the annuity owner
Who can surrender a deferred annuity contract?