Ch 9 Questions

P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?

An immediate annuity •designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase.

A 45 year-old woman won $100,000 in scratch off lottery tickets. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?

Deferred fixed annuity

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

Does not have to make any further payments

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deferred

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible installment deferred

The type of annuity that can be purchased with one monetary deposit is called?

Immediate annuity

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

T has an annuity that guarantees and income payments for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain

Which of these is an element of a single premium annuity?

Lump-sum payment

Which of these statements concerning an individual straight life annuity is accurate?

Payments are made to an annuitant for life

Which of the following are equity indexed annuities typically invested in?

S&P 500

An immediate annuity consists of?

Single Premium

K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?

Single premium immediate joint with survivor annuity

What is the basic function of an annuity?

The systematic liquidation of accumulated funds

A variable annuity has which of the following characteristics?

Underlying equity investments

Which type of contract liquidates an estate through recurrent payments?

annuity

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

deferred

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)

installment refund annuity

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

the current contract surrender value

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

variable