annuities quiz

what is another term used for a "pure" life annuity?

life income

what would most likely purchase an immediate annuity

retiree having a lump sum to invest

when a large sum of money is used to structure monthly payments, which product is typically used?

an immediate annuity

during the liquidation phase of an annuity contract, to whom are the income benefit normally payable to

annuitant

a large corporation pension plan purchased an accumulation annuity contract where all of the participating employees received certificates of participation. what is this contract called?

group deferred annuity

taking a sum of money and decreasing it in size is called

capital liquidation

the owner of a single premium deferred annuity is entitled to do what

choose the length of the payout period choose who will be the recipient of the annuity payments cash surrender the contract

an annuity's accumulation period may

continue after the purchase payments stop

the main purpose of an annuity is to

create a stream of income

what pays an income to two or more annuitants until the death of the last annuitant

joint and survivor annuity

which is associated with an immediate annuity?

lack of an accumulation period

the contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date

nonforfeiture options

how do benefit payments fluctuate over time in a variable life annuity

reflects changes in the market value of assets in a separate account

a business may purchase an annuity for these reasons

structuring a liability settlement payment accumulating assets on a tax-deferred basis providing a pension to employees

an insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years what is this back-end load referred to as?

surrender charge

what annuity contract feature is meant to discourage withdrawals and exchanges

surrender charges

how are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?

taxed as ordinary income in the year received

the exclusion ratio determines

the amount of an annuity payment subject to income tax

a teacher recently retired at age 63 and has a tax sheltered annuity (TSA). periodic deposits total $120,000 and the value of the contract is now worth $200,000. how much is taxed if the current value is surrendered today?

$200,000

what is not a valid contract exchange

an annuity exchanged for a life insurance policy

the surrender charge on many deferred annuity contracts are waived when the

annuitant dies or becomes disabled

interest is credited to a fixed annuity no lower than the

contract guaranteed rate

what happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

decreases

an individual, age 45, would like to help pay for his daughter's college expenses in 10 years. which annuity would be appropriate for this type of individual

deferred annuity

an annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future what type of annuity payout option is this?

fixed amount

the administrator for a corporate pension plan bought an accumulation annuity contract for its 2,000 employees. all 2,000 participating employees received certificates of participation. what kind of contract is this?

group deferred annuity

a life annuity with period certain is characterized as

guaranteeing benefit payments for a stated minimum number of years

a single premium deferred annuity sometimes contains a bailout feature. which statement regarding this feature is correct?

if the interest rate falls below a specified level, the surrender charge is waived

an annuity which starts paying monthly benefits within a month after issuance is called

immediate annuity

the authority to change the beneficiary in an individual annuity lies with the

owner

Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will

remain a constant dollar amount for the duration of the annuity period

Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. no further payments are permitted and the income stream begins in 15 years. This contract is a

single premium deferred annuity

what is the effect of the market value adjustment in a market value adjustment annuity?

transfers some of the investment risk to the policyowner