Annuities

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?

2.5%

Annuities or pure endowment contracts have a grace period of at least

30 days

How long is the free look period for annuities if the contract holder is older than 65?

30 days

When an annuity is written, whose life expectancy is taken into account?

Annuitant

Which of the following will NOT be an appropriate use of a deferred annuity?

Creating an estate

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?

It is a percentage of the cash value and decreases over time.

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity.

If an insurer has overpaid the benefit on an annuity because the age of the insured was misstated,

The amount and an interest charge may be charged against the current or next payments.

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

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?

The annuitant must be a natural person.

Which of the following is true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

What happens if a deferred annuity is surrendered before the annuitization period?

The owner will receive the surrender value of the annuity.

In regards to disclosure requirements for annuity contracts, if the buyer's guide and the disclosure document are available to be printed from the insurer's Web site,

This will fulfill the disclosure requirements for applications received through the Internet.

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

All of the following information about a customer must be used in determining annuity suitability EXCEPT

Beneficiary's age

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

Which of the following is NOT fundable by annuities?

Death benefits

If an annuitant dies before annuitization occurs, what will the beneficiary recieve?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

Why is an equity indexed annuity considered to be fixed annuity?

It has a guaranteed minimum interest rate.

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

Which of the following best describes a pure life annuity settlement option?

Pure life provides payments for as long as the annuitant is alive.

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

Which of the following products requires a securities license?

Variable 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

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?

Deferred

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits.

Immediate annuity

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

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

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments