Chp 2 part E Annuities: A Guide to Understanding
How many classifications of annuities are there ?
4
Flexible premium deferred annuity
An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuity
A universal life is best described as ?
Annually Renewable Term policy with a cash value account.
A universal life insurance policy is best described as a
Annually renewable Term policy with a cash value account.
Single Life
Annuity payments made based on one life
Multiple Life
Annuity payments made based on two or more lives
Outlive
Annuity protects against running out of money
Types of Annuities
Based on premium payment, income start, investment, and payout
Fixed Period
Benefits paid for specified time, regardless of annuitant's life
Fixed Amount
Benefits paid until funds exhausted, regardless of annuitant's life
Annuity
Contract providing income for a specified period or life
the annuitant dies before the annuitization period starts, what will the beneficiary receive?
Either the amount paid into the annuity or the cash value, whichever is greater
What type of annuity credits its interest based upon an index such as S&P 500?
Equity indexed annuity
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
Indexed Annuity
Fixed annuity with higher returns tied to an index
Joint and Survivor
Guaranteed income for two recipients, reduced after first death
Installment Refund
Guaranteed installments until entire principal is paid out
Fixed Annuity
Guaranteed interest rate, fixed income payments
Shorter Life Expectancy
Higher annuity benefit
Annuity Income Amount
Income based on premium, payment frequency, interest rate, age, and gender
Deferred Annuity
Income payments start after one year of purchase
Immediate Annuity
Income payments start within one year of purchase
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed amount
Variable Annuity
Invested in separate account, variable returns
Why is an index annuity considered to be fixed?
It has a fixed rate of return.
Variable whole life insurance is based on what type of premium?
Level fixed premium investment product
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
Mortality tables are used by insurance companies to predict what?
Life expectancy and the death rates for specific groups of individuals
Cash Refund
Lump-sum refund of principal minus benefit payments
Single Premium
One-time lump-sum payment for annuity
What universal life option has a gradually increasing cash value and a level death benefit?
Option A
Pure Life
Payments cease at annuitant's death, highest monthly benefits
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
Payments for 15 years
Life with Period Certain
Payments guaranteed for annuitant's lifetime and specified period
Joint Life
Payments until first death among annuitants
Beneficiary
Person receiving annuity assets upon annuitant's death
Annuitant
Person receiving annuity payments based on life expectancy
Periodic Payments
Premiums paid in installments over time
Life with Guaranteed Minimum
Principal refunded to beneficiary if annuitant dies before payout
Owner
Purchaser of annuity contract with rights and benefits
Life Contingency Options
Pure life vs. life with guaranteed minimum
Annuities Certain
Short-term annuities with fixed period or amount
Mortality Tables
Tables indicating life expectancy for annuity calculations
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
Annuitization Period
Time when accumulated sum is converted into income payments
Accumulation Period
Time when payments are made into annuity and earn interest
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
Term
What type of life insurance policy offers pure death protection
Joint Life Annuity
an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that
Joint and Survivor Annuity
arrangement is a modification of the life income option in that it guarantees an income for two recipients that neither can outlive.
What are the three characteristics of a fixed annuity ?
guaranteed minimum interest rate, payments do not vary, payments guaranteed for specific $ amount
A return of premium term policy is written as what type of term coverage ?
increasing
an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?
joint life
long life expectancy
lower benefit
what are the four classifications of annuities?
payment, beginning, investments, deposing
what are the three characteristics of a variable annuity
separate account, no guarantee interest rate, SEC license
