Xcel solutions Review Chapter 8 Annuities
Which type of contract liquidates an estate through recurrent payments?
Answer: Annuities
Which of the following is Not included in an annuity contract?
Answer: AD+D Rider Accidental Death and Dismemberment rider.
The type of annuity that can be purchased with one monetary deposit is called a(n) ?
Answer: Immediate annuity
Which of the following are Equity Indexed annuities typically invested in?
Answer: S&P 500
P is a 40-year woman and would like to purchase an annuity that will provide a lifetime income stream beginning at 60-years old. Which of the following did she NOT buy?
Answer: An immediate Annuity
What is considered to be a characteristic of an immediate annuity?
Answer: Benefits start within one payment period of purchase.
A 45 year old woman won $100,000 in a scratch off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?
Answer: Deferred Fixed 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?
Answer: Deferred.
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
Answer: Does NOT have to make any further payments.
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?
Answer: Fixed Deferred
The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?
Answer: Flexible Installment 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)
Answer: Immediate Annuity
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Answer: Income that cannot be outlived by the owner.
How does indexed annuity differ from a fixed annuity?
Answer: Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)
Answer: Installment Refund Annuity
Variable annuities may invest premiums in each of the following, EXCEPT:
Answer: Insurer's corporate business account
Which of these statements concerning an individual straight life annuity is accurate?
Answer: Payments are made to an annuitant for life
An immediate annuity consists of a
Answer: Single Premium
Which of these is an element of a single premium annuity?
Answer: 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?
Answer: Single Premium
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)?
Answer: Straight Life Annuity
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
Answer: The current contract surrender value
An individual who purchases a Life Annuity is given protection against?
Answer: The risk of living longer than expected
What is the basic function of an annuity?
Answer: The systematic liquidation of accumulated funds
A variable annuity has which of the following characteristics?
Answer: Underlying equity investments
A(n) ______ annuity pays benefits based on units rather than on stated dollar amounts?
Answer: Variable
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Answer: Variable
All of the following statements regarding a Tax sheltered Annuity (TSA) are true Except?
Answer: 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?
Answer: life annuity with period certain
K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?
Answer: single premium Immediate Joint with Survivor Annuity
