Annuities

Which of the following is an annuity that is linked to a market-related index?

Equity-indexed annuity.

How soon can the benefit payments begin with a deferred annuity?

A minimum of 12 months after date of purchase

During the accumulation period, who can surrender an annuity?

Policyowner

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made?

Refund annuity

Under a non-qualified annuity, interest is taxed after the

exclusion ratio has been calculated

Which of these annuities require premium payments that vary from year to year?

flexible premium deferred annuity

An annuity is primarily used to provide

Retirement income

What is the nonforfeiture value of an annuity before annuitization?

All premiums paid, plus interest, minus any withdrawals and surrender charge

Which of these is NOT considered to be a purpose of an annuity?

Annuities are meant to create an estate.

Which of the following is considered to be the period when the accumulated value in an annuity is paid out?

Annuitization period

The taxable portion of each annuity payment is calculated using which method?

Exclusion ratio

How are annuities given favorable tax treatment?

Gains are taxed at distribution

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?

Guaranteed lifetime withdrawal benefit.

What happens to interest earned if the annuitant dies before the payout start date?

It is taxable.

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?

Life annuity certain

Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?

Temporary annuity certain.

Fixed period settlement options are considered to be a form of a(n)

annuity

Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called

annuity certain

An annuitant is guaranteed to NOT outlive their benefits with a(n)

Guaranteed lifetime withdrawal benefit

How do interest earnings accumulate in a deferred annuity?

On a tax-deferred basis

Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?

Premiums paid plus interest earned is returned to the beneficiary

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's

income period

Who assumes the investment risk with a fixed annuity contract?

The correct answer is "The insurer". It is the insurance company that bears the investment risk of a fixed annuity. The insurance company guarantees the annuitant's principal as well as a guaranteed minimum rate of return, even if the underlying assets underperform the guaranteed rate.

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies?

Life Only

An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?

1 month

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income Annuity

Which of these statements regarding the annuitant is CORRECT?

The annuitant's life expectancy determines the annuity payments.

If the annuitant dies before the annuity start date,

The premiums paid plus interest will be given to the beneficiary.