unit 11Gold

All of the following statements regarding annuities are correct EXCEPT (a) generally, annuity contracts issued today require fixed, level funding payments (b) annuities are sold by life insurance agents (c) an annuity is a periodic payment (d) annuitants can pay the annuity premiums in lump sums

(a) generally, annuity contracts issued today require fixed, level funding payments

James died after receiving $180 monthly for six years from a $25,000 installment refund annuity. His wife Lucy, as beneficiary, now will receive the same monthly income until her payments total

(b) $12,040 James received $12,960 (72 months X $180 = $12,960). Lucy will receive the difference ($25,000 - $12,960 = $12,040)

4. James died after receiving $180 monthly for six years from a $25,000 installment refund annuity. His wife Lucy, as beneficiary, now will receive the same monthly income until her payments total

(b) $12,040 James received $12,960 (72 months X $180 = $12,960). Lucy will receive the difference ($25,000 - $12,960 = $12,040) Reference: State Study Manual, Unit 11, " Annuity Payout Options" - "Installment Refund Option"

3. Before he died, Gary received a total of $9,200 in monthly income payments from his $15,000 straight life annuity. He also was the insured under a $25,000 life insurance policy that named his wife, Darlene, as primary beneficiary. Considering the two contracts, Darlene would receive death benefits totaling

(b) $25,000

9. Before he died, Gary received a total of $9,200 in monthly income payments from his $15,000 straight life annuity. He also was the insured under a $25,000 life insurance policy that named his wife, Darlene, as primary beneficiary. Considering the two contracts, Darlene would receive death benefits totaling

(b) $25,000

2. When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, that event is generally known as a

(b) 1035 exchange

Which of the following statements regarding annuity payout options is NOT correct? (a) Under a straight life annuity option, all annuity payments stop when the annuitant dies. (c) A period certain annuity guarantees a definite number of payments. (d) Joint and survivor annuities guarantee payments for the duration of two lives.

(b) In a cash refund annuity, the annuitant's beneficiary always receives an amount equal to the beginning annuity fund plus all interest.

2. What annuity payout option provides for lifetime payments to the annuitant but guarantees a certain minimum term of payments, whether or not the annuitant is living?

(b) Life with period certain

6. Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the annuity payment ceases. This is an example of

(b) a joint and full survivor annuity

Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the annuity payment ceases. This is an example of

(b) a joint and full survivor annuity This family cannot outlive the $200 monthly income with a joint and full survivor annuity.

4. Which of the following statements best describes equity index contracts?

(c) Most of the investments backing equity index contracts are similar to those for non-indexed contracts.

5. Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select?

(c) a cash refund annuity

7. All of the following statements about variable annuities are correct EXCEPT

(c) once a variable annuity has been annuitized, the amount of monthly annuity income cannot fluctuate

12. Which of the following statements regarding equity index contract factors is most CORRECT?

(d) Cash values of equity index contracts usually grow at a minimum interest rate.

When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, that event is generally known as a

1035 exchange

Annuity payments are taxable to the extent that they represent interest earned rather than capital returned." When an annuitized payout option is chosen, what method is used to determine the taxable portion of each payment?

Exclusion ratio

What annuity payout option provides for lifetime payments to the annuitant but guarantees a certain minimum term of payments, whether or not the annuitant is living?

Life with period certain

Which of the following statements regarding annuity payout options is NOT correct? Under a straight life annuity option, all annuity payments stop when the annuitant dies. (c) A period certain annuity guarantees a definite number of payments. d) Joint and survivor annuities guarantee payments for the duration of two lives.

b In a cash refund annuity, the annuitant's beneficiary always receives an amount equal to the beginning annuity fund plus all interest.

Which of the following statements best describes equity index contracts?

c) Most of the investments backing equity index contracts are similar to those for non-indexed contracts.

All of the following statements about variable annuities are correct EXCEPT (a) individuals who sell variable annuities must be registered with the FINRA (b) the contract owner bears the investment risk rather than the insurance company (d) during the accumulation period, the contract owner's contributions to the annuity are converted to accumulation units and credited to his or her account

c) once a variable annuity has been annuitized, the amount of monthly annuity income cannot fluctuate The monthly income absolutely will fluctuate with a variable annuity.

Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select?

cash refund annuity

Which of the following statements regarding equity index contract factors is most CORRECT?

d) Cash values of equity index contracts usually grow at a minimum interest rate.