Chapter 7

All of the following are tax-deferred, EXCEPT: 1. A qualified annuity 2. A nonqualified annuity 3. Single premium annuity 4. Tax-qualified annuitant

Tax-qualified annuitant

Which of the following indicates the person upon whose life the annuity income amount is determined in an immediate annuity? 1. Contract owner 2. Annuitant 3. Beneficiary 4. Policyholder

2. Annuitant

An annuity that makes payments for life but also guarantees benefits for a specific number of years is known as a: 1. Joint and survivor annuity 2. Installment refund annuity 3. Level premium deferred annuity 4. Straight life annuity with period certain

4. Straight life annuity with period certain

Joan is receiving payments from a fixed annuity. If the inflation rate increases steadily during the next few years, how will the purchasing power of the annuity payments be affected? 1. It is decreased 2. It is increased 3. It is partially increased 4. There will be no effect

1. It is decreased

Which of the following receives tax deferral during the accumulation period of an annuity contract? 1. Capital expenditure solicitations 2. Any unearned income realized 3. The interest or accumulations credited 4. Viatical settlement benefits

3. The interest or accumulations credited

In which of the following ways is an annuity similar to a whole life or term life insurance policy? 1. They may both be used to fund a qualified plan 2. They both pay a stipulated death benefit 3. They are both characterized by pre-paid financing 4. They both pay a benefit upon the death of the contract owner

3. They are both characterized by pre-paid financing

Which of the following is provided to a sole beneficiary who desires a single life option in his or her annuity contract? 1. Life income 2. Income for a period certain 3. Life income with rights of survivorship 4. Tax-exempt income

1. Life income

Which of the following best describes an annuity? 1. A policy paying a death benefit to a primary beneficiary 2. A systematic reimbursement of funds 3. The recipient of life income 4. The pay-in or accumulation period

2. A systematic reimbursement of funds

Which of the following best describes a pure or straight life annuity with ten years certain? 1. The annuitant must make payments for ten years after the contract matures 2. The annuitant or his survivor is guaranteed ten years of payments and if the annuitant survives ten years, payments continue for the lifetime of the annuitant 3. The annuitant will be paid for ten years and then income ceases 4. The annuitant or his survivor is guaranteed ten years of benefits

2. The annuitant or his survivor is guaranteed ten years of payments and if the annuitant survives ten years, payments continue for the lifetime of the annuitant

Allan is 44 years of age and is awarded a $2.5 million settlement as a result of an auto accident. Due to the accident, Allan is totally disabled and can no longer earn an income. If he wishes to purchase an annuity with part or all of the award, what type of contract would you, as the producer, recommend? 1. Joint and survivor annuity 2. Deferred annuity 3. Immediate annuity 4. Fixed annuity

3. Immediate annuity

Which of the following annuities pays a monthly income thirty days after it is purchased and is funded with one premium payment? 1. Level premium immediate annuity 2. Flexible premium immediate annuity 3. Single premium immediate annuity 4. Lump sum deferred annuity

3. Single premium immediate annuity

An annuity is a systematic liquidation of funds. What type of annuity would you as an agent recommend your client purchase in order to protect against outliving one's income? 1. Fixed annuity 2. Flexible premium deferred 3. Straight life annuity 4. Joint and survivor annuity

3. Straight life annuity

Which of the following annuity contracts will potentially pay the greatest monthly income once the annuitization period commences? 1. Pure life annuity 2. Life annuity with ten years certain 3. Life annuity with fifteen years certain 4. Life annuity with a period certain

4. Life annuity with a period certain

The purpose of a straight life annuity is to: 1. Protect an individual against superannuation 2. Protect an individual against premature death 3. Protect an individual against investment risk 4. Provide life income with the possibility of a refund

1. Protect an individual against superannuation

A market value adjusted annuity is a variation of a variable annuity. Which of the following is not true with regard to this type of annuity? 1. The market value adjustment may increase or decrease 2. When an adjustment is made it is based upon current interest rates 3. The guaranteed interest rate applies if the annuity is surrendered early 4. Regulation of these annuities is under the FINRA

1. The market value adjustment may increase or decrease

Which of the following best describes an annuity that is purchased with multiple premiums and whose benefit begins more than a year following its purchase? 1. Single premium immediate annuity 2. Level premium immediate annuity 3. Flexible premium flexible benefit life 4. Flexible premium deferred annuity

4. Flexible premium deferred annuity

In an equity indexed annuity, which of the following is guaranteed? 1. The principal. 2. The inflation rate. 3. The upside potential. 4. The downside factor.

3. The upside potential.

A mortality factor is used by insurers which influences life insurance and annuity products. Which of the following would affect an insurer the greatest if there were a sudden decrease in mortality? 1. Group life 2. Whole life insurance 3. Modified life insurance 4. Life annuities

4. Life annuities

Which of the following statements is true regarding a market value adjusted annuity? 1. It is not linked to an index 2. It is linked to an index 3. It is a form of variable annuity 4. It is a permanent insurance product

1. It is not linked to an index

The owner of an annuity contract may also be the: 1. Beneficiary 2. Carrier 3. Annuitant 4. Appointee

3. Annuitant