Chapter 6 Exam: Annuities
Which of these statements concerning an individual straight life annuity is accurate?
Payments are made to an annuitant for life
Which of the following are Equity Indexed Annuities typically invested in?
S & P 500
An immediate annuity consists of a:
Single Premium
S received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
Single Premium
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life Annuity
D is a forty year old man and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?
An immediate annuity
Which type of contract liquidates an estate through recurrent payments?
Annuity
What is a characteristic of an immediate annuity?
Benefit payments start within one payment period
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
T purchased a $100,000 single premium. Straight life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company...
Does NOT have to make any further payments
All of the following statements regarding a tax sheltered annuity (TSA) are true except:
Income derived from the TSA is received income tax-free
All of the following statements regarding a tax sheltered annuity (TSA) are true except:
Income derived from the TSA received tax income free
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income that cannot be outlined by the owner
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index.
T has an annuity that guarantees an income payment for the rest of his life. The contract guarantees if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with period curtain
A contract owner terminates an annuity before the income payment period begins. The owner will then receive...
The current contract surrender value
Which of the following is NOT included in an annuity contract?
AD&D Rider
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
Deferred
The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?
Flexible Installment Deferred
The type of annuity that can be purchased with one monetary deposit is called a(n):
Immediate Annuity
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)
Immediate Annuity
K is an annuitant currently receiving payments if she were to die before receiving payments if she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n):
Installment Refund Annuity
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called...
Installment Refund Annuity
Which of these is an element of a single premium annuity?
Lump Sum Payment
An individual who purchases a life annuity is given protection against:
The risk of living longer than expected
Which type of annuity has cash rate that is based upon the performance of its underlying investment funds?
Variable
