Ch. 7 Annuities

Which type of contract liquidates an estate through recurrent payments? Universal life insurance Whole life insurance Annuity 401(k)

Annuity

How does an indexed annuity differ from a fixed annuity? Fixed annuity owners receive credited interest tied to the fluctuations of the linked index Indexed annuity owners receive credited interest tied to the fluctuations of the linked index Fixed annuity owners have a separate investment account Indexed annuity owners receive annual dividends

Indexed annuity owners receive credited interest tied to the fluctuations of the linked index

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? Fixed Certain Joint and Full Survivor Life Annuity with Period Certain Installment Refund

Life Annuity with Period Certain

An individual who purchases a Life annuity is given protection against inflation the risk of dying prematurely the risk of living longer than expected the risk of not having enough retirement income

the risk of living longer than expected

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n) Cash Refund Installment Refund Straight Life annuity Life Annuity with Period Certain

Straight Life annuity

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? A straight life annuity A variable annuity An immediate annuity A deferred annuity

An immediate annuity

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 Period Fixed Deferred Fixed Immediate Fixed Variable

Fixed Deferred

Which of these is an element of a Single Premium annuity? Deferred payment Lump-sum payment Fixed income Tax-deductible

Lump-sum payment

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Deferred Flexible Variable Fixed

Variable

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? 403(b) Plan Deferred Premium Single Premium Period Certain

Single Premium Immediate Annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.

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? Immediate Retroactive Deferred Universal

Deferred

The type of annuity that can be purchased with one monetary deposit is called a(n) Single Deposit annuity Single Premium annuity Fixed annuity Immediate annuity

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) Flexible Premium Deferred annuity Variable annuity Immediate annuity Straight Life annuity

Immediate annuity Immediate annuities start providing income payments usually starting within 30 days from the purchase date. Deferred annuities start providing income payments after the first year.