Chapter 5

No later than within 1 year

A Single Premium Immediate Annuity (SPIA) begins paying out its benefit:

1

A retiree elected the Life Income with 10 Year Period Certain. He/she dies the day after receiving 119 monthly payments. The beneficiary will receive _______ more payment(s):

Annuitization Option

A systematic distribution of accumulated funds, either over one's life, or a specified period, is the definition of a(n):

Variable

All of the following annuities can be sold without a securities registration/license, except:

The actual rate of interest credited will be based on the state-published interest rate index

All of the following are traits of a Fixed Annuity, except:

They are similar to life insurance

All of the following are true regarding annuities, except:

Annuitant

All of the following terms are the same regardless if the policy is life insurance or an annuity, except:

6 more years of payments

An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began?

Stock market value

An insurer considers all of the following when determining the fixed annuity payments, except:

Flexible

Annuities may be funded with either a lump sum or a ______ premium basis.

Education level

Annuity income benefit payments are based on all of the following, except:

She cannot change the distribution once commenced

At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished?

Taxes on any policy earnings

Deferred annuities are normally purchased to defer ___________.

Settlement

Electing a _____________ option for an annuity means that the annuitant will receive an income for life or for a temporary period of time.

An annuity

G is concerned about the future and living a comfortable retirement. Which of the products listed below is ideally suited to help G prepare for his retirement goal?

Zero

Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes the policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive?

Irrevocable

If an annuity lifetime benefit is selected, in most cases it is a/an _________ election.

Variable

If an annuity uses units instead of dollars to determine the value of the policy, then it is a(n) _________ annuity.

Lump Sum

Instead of waiting to receive her payments over time, Jeanne decides to obtain the greatest amount of money out of her annuity immediately. Which option did she choose?

Life Income

James is nearing retirement and has accumulated $175,000 in an annuity. He wants the largest possible monthly benefit for as long as he lives. Which option should he choose?

Life Income with Refund Option

Jasmine has deposited $100,000 into a single premium immediate annuity. If Jasmine were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to her sister. Jasmine has selected the:

$1,000,000

Jill wants to know how much to put into her annuity in order to receive the greatest benefit payment amount. Which of the following will provide her with the largest monthly income regardless of the settlement option selected?

Becomes lower

K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 3%, the effect on this month's income benefit check will be such that it:

Remain the Same

K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 4%, the effect on this month's income benefit check will be such that it:

Becomes Higher

K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 5%, the effect on this month's income benefit check will be such that it:

Life Income Joint and Survivor

Mr. & Mrs. Smith received monthly benefits from their annuity, and upon Mr. Smith's death, Mrs. Smith receives a reduced amount. What annuity payment option did they choose?

Insurer

Only a(n) __________ can guarantee to provide an income benefit payment for as long as the annuitant is alive.

Owner

Only the _________ can surrender an annuity.

Life Income Joint and Survivor

Ralph has selected an annuity benefit or payment option where, upon annuitization, the annuity will pay a benefit for as long as either Ralph or a co-annuitant are alive. Ralph has elected which of the following benefit or payment options?

Age 70

Sam wants to know at what age he should annuitize in order to receive the highest monthly income benefit payment:

Owner

Similar to life insurance, this party has all of the rights in the annuity contract. This party is referred to as the:

Single Premium Immediate Annuity

Susan, age 65, inherits a substantial sum of money and wants to have the money distributed to her over the rest of her life starting next month. Which product offered by the life insurance industry will allow her to accomplish her objective?

Joint Life

The Payment Option that pays an income to two annuitants while both are living, and stops upon the death of the first annuitant, is which of the following?

Annuitant

The __________ is the person on whose life the annuity contract's income benefit is based.

Life Income with Refund Option

The annuity __________ option selected can provide a temporary or lifetime payment.

Settlement

The annuity __________ option selected can provide a temporary or lifetime payment.

Life Income Joint and Survivor 100%

The annuity benefit or payment option requiring the greatest amount of capital per $1,000 of benefit is:

Accumulation

The annuity pay-in period is also referred to as the ________ period.

Life Income Option

The annuity settlement option that pays out the highest monthly income for as long as the annuitant lives, and leaves no residual value upon the annuitant's death, is the:

Determine the contract's interest credit

The owner of an annuity may do all of the following, except:

Nothing

Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant?

State of residence

Upon annuitizing an annuity, all of the following factors help in determining the amount of the income benefit payment, except:

Joint and 1/2 Survivor

W and Z are annuitants of an annuity. W dies and Z receives 1/2 of the amount coming into their household when both were alive. They must have elected which of the following settlement options?

The party whose life the policy's benefits are based on

What is an annuitant, in regard to an annuity policy?

To protect against outliving one's income

What is the primary purpose of an annuity?

Life Income with Period Certain

Which Payment Option pays an income for the life of the annuitant or for a specified period, whichever is longest?

Equity-indexed annuity

Which annuity product offers interest rates linked to the positive performance of the S&P 500?

Single premium immediate

Which of the following annuities does not have a traditional accumulation phase?

Values and benefits may increase, but not decrease

Which of the following is TRUE regarding Indexed Annuities?

Upon annuitization, the annuity payments are level

Which of the following statements is TRUE regarding Fixed Annuities?

50 year old female

Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized?

All payments cease

With a Life Income Payment Option, what happens at the annuitant's death?

Flexible

X is 57 years old, and planning for their retirement. They do not know what their cash flow will look like over the next 10 years, but wants to fund an annuity to provide retirement income. Which of the following premium funding methods would be best for X to consider?

Nothing

Z chooses a life income with 10 year period certain settlement option for the annuity Z owns. Z dies after 15 years of receiving income benefit payments. What does Z's beneficiary receive?

Systematic withdrawals

are allowed as a way to access annuity values without having to elect a settlement option or surrender the contract.