LIFE ONLY_Chapter 6- Annuities

Which of the following is another term for the accumulation period of an annuity? A. Premium period B. Liquidation period C. Annuity period D. Pay-in period

D. Pay-in period

In an annuity, the accumulated money is converted into a stream of income during which time period? A. Annuitization period B. Payment period C. Amortization period D. Conversion period

A. Annuitization period

Under a pure life annuity, an income is payable by the company A. For a guaranteed period of time, whether or not the annuitant survives to the end of that period B. For as long as either the annuitant or named beneficiary is alive C. Only for the life of the annuitant D. Until the principal and interest are exhausted

C. Only for the life of the annuitant

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death? A. Installment refund B. Joint and survivor C. Pure life D. Life with guaranteed minimum

C. Pure life

After three years of making premiums into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? A. Termination penalty B. Bail-out charge C. Inflation adjustment D. Surrender charge

D. Surrender charge

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much under each payment will be? A. Cash refund B. Installments for a fixed period C. Installments for a fixed amount D. Installment refund

B. Installments for a fixed period

The main difference between immediate and deferred annuities is A. The amount of each payment B. When the income payments begin C. How the annuity is purchased D. The number of insureds

B. When the income payments begin

When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is the money placed? A. Each contract's separate account B. The annuity owner's account C. The insurance company's general account D. Forwarded to an investor

C. The insurance company's general account

Which of the following are NOT funded by annuities? A. A person's retirement B. Estate liquidation C. Death benefits D. Cash accumulation for any reason

C. Death benefits

Which of the following products will protect an individual from outliving his or her money? A. Annuity B. Joint and survivor policy C. Adjustable life policy D. Permanent life insurance

A. Annuity

Which of the following is TRUE regarding the accumulation period of an annuity? A. It is limited to 10 years B. It is a period during which the payments into the annuity grow tax deferred C. It is also referred to as the annuity period D. It is a period of time during which the beneficiary receives income

B. It is a period during which the payments into the annuity grow tax deferred

Which of the following is NOT true regarding the accumulation period of an annuity? A. It is also known as the pay-in period B. It would not occur in a deferred annuity C. It is the period during which the annuity payments earn interest D. It is the period over which the owner makes payments into an annuity

B. It would not occur in a deferred annuity

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? A. The premium value will be paid to the annuitant's estate B. All benefits will be forfeited C. The cash value will be paid to the state government D. The cash value will be paid to the annuitant's estate

D. The cash value will be paid to the annuitant's estate

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? A. The annuitant must be a natural person B. A corporation can be an annuitant as long as it is also the owner C. A corporation can be an annuitant as long as the beneficiary is a natural person D. The contract can be issued without an annuitant

A. The annuitant must be a natural person

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend A. Joint and survivor B. Straight life C. Life income with period certain D. Installment refund

B. Straight life

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A. The insurance company will retain the cash value and pay back the premiums to the owner's estate B. The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary C. The beneficiary will receive the money paid into the annuity D. The owner's estate will receive the money paid into the annuity

C. The beneficiary will receive the greater of the money paid into the annuity or the cash value

All of the following statements are true regarding installments for a fixed amount EXCEPT A. This option pays a specific amount until the funds are exhausted B. The annuitant may select how big the payments will be C. The payments will stop when the annuitant dies D. Value of the account and future earnings will determine the time period for the benefits

C. The payments will stop when the annuitant dies

Which of the following is true regarding a market value adjusted annuity? A. It provides a level benefit payment B. The owner is guaranteed a fixed interest rate for a specific period of time C. The insurer bears all the market risk of changing interest rates D. There are no penalties for a premature surrender of the annuity

B. The owner is guaranteed a fixed interest rate for a specific period of time

The minimum interest rate on an equity indexed annuity is often based on A. An index like Standard & Poor's 500 B. The returns from the insurance company's separate account C. The annuitant's individual stock portfolio D. The insurance company's general account investments

A. An index like Standard and Poor's 500

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? A. The annuitant will receive the higher of either the guaranteed minimum rate or current rate B. The annuitant will always receive the current investment rate C. The annuitant will receive the lower of either the guaranteed minimum rate or current state D. The annuitant will only receive the guaranteed minimum specified in the contract

A. The annuitant will receive the higher of either the guaranteed minimum rate or current rate