Chapter 14 - Annuities

Which of the following is NOT a term for the period of time during which an annuitant is making payments or investments in their annuity? A. Annuitization B. Accumulation C. Pay in period D. Deferred period

A. Annuitization

Joan is a producer that is considering the suitability of an annuity recommendation for a consumer. Which of the following must she consider? A. Financial status B. Interest earned C. Return rate D. Poor's rating

A. Financial status

Which of the following stops all payments on the death of an annuitant? A. Life annuity B. Period Certain C. Refund Certain D. Survivor

A. Life annuity

A Single Premium annuity's payment has which feature? A. Lump sum payment B. Fixed rate C. Tax deductible D. Deferred payment

A. Lump sum payment

Upon annuitization, which of the following will have the largest monthly payout? A. Straight Life B. Joint Life C. Survivor D. Life with Period Certain

A. Straight Life

Upon annuitization, Sam wants to withdraw his annuity funds in a lump sum without paying a penalty. After what age, can Sam make his withdrawal?

After age 59 1/2

What do accumulation units of Variable Annuities convert into upon annuitization?

Annuity units

____________ _______ represent shares in an investment account that are invested in the stock market.

Annuity units

Allen died during the accumulation period of his annuity. Which of the following will receive the benefits? A. Estate B. Beneficiary C. Insurer D. Owner

B. Beneficiary

What is the penalty applied to the taxable portion of an annuity surrendered prior to age 59 1/2?

10%

A prospective Deferred Annuity owner is concerned about what would happen if he surrendered his annuity before its annuitization period. The agent most likely explained which of the following? A. The owner will receive some of their money back, which would depend on the surrender value established by their insurer at the time that their contract was terminated B. It is not possible to surrender an annuity before its annuitization period. C. There is a Non-Forfeiture Option that guarantees that an owner will receive a surrender value of their contract D. The insurance company will apply their money to another annuity or to a Life Insurance policy, but the money cannot be returned

C. There is a Non-Forfeiture Option that guarantees that an owner will receive a surrender value of their contract

What kind of an annuity option will pay a lump sum amount that is the difference between an annuity's value, and its income payments, to a beneficiary upon an annuitant's death?

Cash Refund

Mario's Variable annuities may not invest its premiums in which of the following? A. Junk bonds B. Stock in common C. Securities/Money Markets D. An insurer's corporate business account

D. An insurer's corporate business account

What isn't considered in a Single Premium Annuity? A. Gender B. Attained Age C. Premium Amount D. Number of dependents

D. Number of dependents

Tammy at age 55 bought an annuity that she will pay in $650 a month for twelve years. In twelve years Tammy expects to use the money to help fund her retirement. Tammy's situation describes what kind of an annuity?

Deferred

Men have a longer life expectancy than women. True or false?

False, women have a longer life expectancy than men.

Fixed annuities are supported by an insurer's _____________ account.

General

Where are Fixed Annuity premium payments invested?

General Account

Dan purchased a $50,000 annuity, and he began taking out payments within 3 months. What kind of annuity did Dan purchase?

Immediate

Which annuity allows an annuitant to select the time period for their benefits, and their insurer to determine how much each payment will be?

Installments for a Fixed Period

The annuity owner may change the annuity date, the settlement option and even the beneficiary, but cannot change the _______ date.

Issue

The kind of annuity that Mary has will guarantee her an income for the rest of her life. It also has a special feature that if Mary dies before receiving her 20 year payments the rest of the funds will go to her daughter Jane for the remaining years. Mary has what kind of annuity?

Life Annuity with Period Certain

Which annuity payout phase provides the largest monthly amount?

Pure Life

Which Annuity benefit option pays the most income per month?

Pure Straight Life Income Option

For three years Susan made payments into a flexible premium deferred annuity and then she decided to surrender it. Her insurer returned all of her premium payments, except for a predetermined percentage amount. What does this describe?

Surrender charge

Who can surrender a deferred annuity?

The annuity owner

Bob is exchanging his annuity for another one. What must his agent disclose to him?

The possible tax consequences of the transaction

At the surrender of an annuity, what will an owner receive?

Their premiums and interest less their surrender charge

Annuities Certain are annuity types that pay amounts in certain quantities and times. True or false?

True

Goober's Furniture wants to purchase an annuity. As Goober's agent, you should alert Goober to the fact that an annuity cannot be used as an investment vehicle to defer taxes on company assets. True or false?

True

When does the payout of a Single Premium Immediate Annuity begin?

Within one year of its purchase date