Annuities

An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet this need?

deferred

Which type of annuity settlements stops when the annuitant dies?

life annuity

The time period during which an annuitant contributes to an annuity is called

the accumulation period

Which of the following statements is true about annuities?

they can provide a lifetime income

Which of the following is NOT true regarding an annuity certain?

benefits stop at the annuitant's death

An annuity that guarantees a minimum rate of return is known as a/an

fixed annuity

Which of the following has the right to surrender a deferred annuity contract?

only the annuity owner

Annuities can be used for all of the following reasons EXCEPT

to create an estate

What type of annuity begins payments to the annuitant one month after it is purchased?

single premium immediate annuity

Annuities may be purchased with all of the following payment methods EXCEPT

deferred

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

annuitant

All of the following information about a customer must be used in determining annuity suitability EXCEPT

beneficiary's age

What does an annuity protect the contract owner against?

living longer than expected

Who bears the investment risk in a fixed annuity?

the insurance company

All other factor being equal, which of the following types of annuities will provide the highest monthly income?

straight life