Chapter 7

T has an annuity that guarantees an income payment 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

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

Straight Life annuity

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

Straight life annuity

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

Variable

An immediate annuity consists of a

single premium

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

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

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)

Immediate annuity