Chapter 6: Annuities Quiz
B. The accumulation period
1. The time period during which an annuitant contributes to an annuity is called: A. The annuity appreciation B. The accumulation period C. The deferred growth D. The savings period
A. Single premium immediate annuity
5. An annuity begins payments to the annuitant one month after it is purchased. What type is it? A. Single premium immediate annuity B. Level premium annuity C. Single premium deferred annuity D. Flexible premium deferred annuity
C. Deferred
2. An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet his need? A. Immediate B. Flexible premium C. Deferred D. Variable
D. Deferred
4. Annuities may be purchased with all of the following payment methods EXCEPT: A. Single B. Level C. Flexible D. Deferred
B. Annuitant
9. When an annuity is written, whose life expectancy is taken into consideration? A. Owner B. Annuitant C. Beneficiary D. Life expectancy is not a fact in annuities
C. Fixed annuity
3. An annuity that guarantees a minimum rate of return is know as a/an: A. Immediate annuity B. Variable annuity C. Fixed annuity D. Deferred annuity
D. The insurance company
10. Who bears the investment risk in a fixed annuity? A. The owner B. The beneficiary C. The annuitant D. The insurance company
D. To create an estate
6. Annuities can be used for all of the following reasons EXCEPT: A. To accumulate retirement finds B. To liquidate an estate C. To fund a child's education D. To create an estate
A. Life annuity
7. Which type of annuity settlements stops when the annuitant dies? A. Life annuity B. Cash refund annuity C. Installment refund annuity D. Period certain annuity
D. They can provide a lifetime income
8. Which of the following statements is true about annuities? A. They are never subject to income tax B. They use the same mortality tables as life insurance C. They are a type of life insurance D. They can provide a lifetime income