Chapter 5 Quiz Questions

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

A couple receives income from annuity. Wife dies, husband no longer receives annuity payments. What type of annuity did they buy?

Joint Life

Which provision in annuity contract allow the owner to surrender the annuity if interest rates drop to a specified level?

Bail-Out

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain?

Individual

Which ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest.

Which is true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

All are true of an annuity owner except:

The owner must be the party to receive benefits

Which best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments.

A deferred annuity is surrendered prior to annuitization. Which best describes the nonforfeiture value of the annuity?

The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.

Which of the following is a feature of a variable annuity?

benefit payment amounts are not guaranteed.

In a fixed annuity, what comprises most of the general account?

conservative investments like bonds

all are true regarding installments for a fixed period annuity option EXCEPT:

its a life contingency option

Which is true regarding variable annuities?

the annuitant assumes the risks on investment.

Which is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

Which will NOT be appropriate use of a deferred annuity?

Creating an estate

What is the advantage of having a qualified annuity?

Favorable tax treatment

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, its called a:

Joint Life Annuity

If a couple both want retirement income even if one of them dies, they would want a:

Joint and Survivor Annuity

Which is FALSE in regards to a group annuity?

That it can be owned by individual employees