Annuities

All of the following are true regarding annuities, EXCEPT:

On a life annuity, payments begin upon the death of the annuitant

All of the following are true regarding Single Premium Immediate Life Income annuities, EXCEPT:

Payments begin upon the death of the annuitant

Single premium immediate annuities are most commonly used for which of the following:

Retirement expense

A woman has inherited a sum of money. She is age 60 and desires to purchase an annuity that will appreciate with market and economic conditions. What type of annuity should she consider?

Variable

A client purchased a single premium deferred annuity in 2004 for $13,000. Ten years later, after their account has grown to $24,000, they withdraw $15,000. How much is taxable:

$11,000

A customer paid $15,000 in premiums into their nonqualified deferred annuity over a period of time. If their account balance is now $26,000 and they withdraw $17,000, how much is taxable:

$11,000

Mr. Jones has contributed a total of $30,000 into a tax-deferred annuity over a period of time, which has now grown to $50,000 due to tax-deferred interest. If he dies now at age 50 prior to annuitizing the contract, what is the tax implication:

$20,000 is taxable to the beneficiary as ordinary income

On which type of annuity must a producer disclose that excess earnings above the guaranteed rate may vary:

An Equity Indexed annuity

Upon death, annuity proceeds payable to a beneficiary are generally taxable. However, if the beneficiary is the spouse of the deceased annuity owner/annuitant, they may continue the contract on a tax deferred basis as the ________ owner:

Contingent

On a fixed annuity, the interest rate that is paid the first year, which could decline thereafter is known as the:

Current interest rate

Cash Surrender is available on an annuity in which of the following situations:

During the accumulation period

A husband and wife are co-annuitants and decide to select the joint life payout option upon annuitization. They will receive monthly annuity payments from the insurer until:

Either the husband or wife dies

An annuity that will make monthly payments to the owner/annuitant while living, but has no value at their death is known as:

Life income

Annuity payments will cease upon the death of an annuitant who has selected which of the following annuity pay-out options:

Life income

Annuities must be written by which of the following:

Life insurance companies

When recommending the purchase or exchange of an annuity, a producer shall have reasonable grounds for believing that the transaction is __________ based upon the customer's financial status, tax status and investment objectives:

Suitable

A penalty that some insurers levy when an annuitant makes a withdrawal in the early years of the contract is known as a:

Surrender charge

During the accumulation period, the earnings in a nonqualified deferred annuity purchased by an individual are:

Tax deferred

All of the following are true regarding Market Value Adjusted annuities, EXCEPT:

They are also known as Equity Indexed annuities

All of the following are true regarding an IRC Section 403(b) Tax Sheltered Annuity, EXCEPT:

They are available to anyone with earned income

Which of the following is NOT true regarding deferred annuities:

They are often used to fund lottery pay-outs or structured settlements

All of the following are true regarding fixed annuities, EXCEPT:

They have no guaranteed rate of return

All of the following are true regarding deferred annuities, EXCEPT:

They provide an immediate source of education funds

A client might purchase an immediate annuity for all of the following reasons, EXCEPT:

To save money for a child's future college expenses

Alice has an annuity with life and 10-year certain period that has her husband Marty listed as beneficiary. If Alice dies 13 years into the 10-year certain period, what will Marty receive from the insurer:

Zero

Which type of annuity requires that the customer bear part of the risk:

A Market Value Adjusted annuity

Fixed annuities are backed by:

The insurer's general account assets

Which of the following is a characteristic of an annuity:

They provide protection for a retired individual from outliving their savings

An annuity where both the principal and the interest are guaranteed, but excess interest may accrue since performance is calculated using an indexing method that is usually linked to the S&P 500 is known as a:

Equity indexed annuity

The individual whose life an annuity is based upon is known as the:

Annuitant

Which contract requires a series of benefit payments to be made at specified intervals:

Annuity

The principal use of a Life Annuity is to:

Arrange an income for old age

Which of the following Annuities will start paying the annuitant a monthly payment right away for the rest of their life:

Immediate

When selling a variable annuity, the most important thing for a producer to verify is the applicant's __________?

Tax status

In a variable annuity the investment risk is to:

The owner

If a client annuitizes an annuity to pay them $250 a month for life or for 15 years, whichever is longer, they have chosen which annuity pay-out option:

Period certain

The Joint and Survivor Life Annuity contract calls for the surviving annuitant to receive a:

Predetermined income for life

What type of annuity will make a cash payment to the beneficiary when the owner/annuitant dies during the annuity period:

Refund

When an owner/annuitant with a life income annuity dies before receiving the value of their account, the remaining funds will be:

Retained by the insurer