Chapter 7 Exam - XCEL Solutions

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

A (n)___________ annuity pays benefits based on units rather than stated dollar amounts.

Variable

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

does NOT have to make any further payments

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

Straight Life Annuity

An individual who purchases a life annuity is given protection against:

the risk of living longer than expected

A variable annuity has which of the following characteristics?

underlying equity investments

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

Which of these statements concerning an individual straight life annuity is accurate?

A straight life annuity pays for the life of the annuitant.

Which of the following is NOT included in an annuity contract?

AD&D Rider

Which type of contract liquidates an estate through recurrent payments?

Annuity

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

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

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible Installment Deferred

Which of the following are Equity Indexed annuities typically invested in?

S&P 500

P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?

Immediate Annuity

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; starts within 30 days from the purchase date

All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT

Income derived from the TSA is received income tax-free

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

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

The current contract surrender value