Annuities

Factors used to determine annuity premiums

- Income amount and payment guarantee - Annuitant's gender - Assumed interest rate

Eric purchased an annuity with favorable rates. However, because of unforeseen circumstances, he needs to surrender the annuity. If the market has gone up, Eric will need to pay a higher surrender charge than if the market has gone down. Eric owns

A market value adjusted annuity

Liz purchases an immediate annuity. The annuity contract must be

A single premium annuity

Devon purchases an annuity that will pay a monthly income for the remainder of his life and then stop making payments. Devon has purchased

A straight life annuity

Tracey is paying money into an annuity she hopes will support her in her retirement years. Her contract currently is in which of the following periods?

Accumulation period

Marcus purchases an annuity that offers a guaranteed min interest rate and a guarantee against loss of principal if the contract is held to term. However if the, Nasdaq moves upward, Marcus' annuity might end up accruing more than the guaranteed min interest rate. Marcus has purchased

An equity indexed annuity

An annuitant is receiving monthly income from the annuity contract. Which period is the annuitant in?

Annuity period

Annuities exist to

Both accumulate a sum of money and distribute a lifetime income

Variable annuities

Growth varies according to investment performance

Annuities are a mechanism for transferring to an insurance company the risk of

Outliving financial resources

Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. Albert has purchased

Refund life annuity

What life annuity payout option guarantees that the total of payments will at least equal the initial amount of the converted annuity fund if payments do not total at least that amount when the annuitant dies?

Refund life annuity

As a risk management product, the method of risk management that annuities represent is

Risk transfer

Which type of annuity is most likely to be used to distribute lottery winnings?

Single premium, temporary annuity with amount certain

What annuity payout option provides a guarantee of a lifetime income and nothing more?

Straight life

Annuities are mechanism for transferring to an insurance company the risk of

The distribution of a lifetime income

The type of annuity whose accumulation feature stands in contrast to a variable annuity is

The fixed annuity

The annuity whose surrender charges vary depending on changes in prevailing interest rates is

The market value adjusted annuity

What annuity is regulated as securities?

Variable annuities

An annuity that guarantees a min rate of return is

a fixed annuity