chapter 6 quiz

all other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity

a 60 year old man

when an annuity is written, whose life expectancy is taken into account

annuitant

in an annuity, the accumulated money is converted into a steam of income during which time period

annuitization period

which of the following products will protect an individual from outliving his or her money

annuity

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

annuity certain

which of the following is a feature of a variable annuity

benefit payment amounts are not guaranteed

what license or licenses are required to sell variable annuities?

both a life insurance license and a securities license

which of the following will not be an appropriate use of a deferred annuity

creating an estate

which of the following is not fundable by annuities

death benefits

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

an annuity owner is funding an annuity that will supplement her retirement. because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the standard and poor's 500 index. she would likely purchase a(n)

equity indexed annuity

according to the nonforfeiture law, if the owner decided to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following

guaranteed surrender value

fixed annuities provide all of the following EXCEPT

hedge against inflation

a man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. what type of annuity is it

immediate

what type of annuity can be purchase with a single premium and provides benefit payments immediately

immediate

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

which of the following is a feature of a single premium immediate annuity

income payments start within one year

which of the following is not true regarding the accumulation period of an annuity

it would not occur in a deferred annuity

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

under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive

nothing; the payments will cease

under a pure life annuity, an income is payable by the company

only for the life of the annuitant

annuities can be used to fund which of the following

retirement plans

after three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. the insurer returns all the premium payments to the owner, except for a predetermined percentage. what is this percentage called

surrender charge

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

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

the beneficiary

who bears all of the investment risk in a fixed annuity

the insurance company

when a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?

the insurance company's general account

which of the following is true regarding a market value adjusted annuity

the owner is guaranteed a fixed interest rate for a specific period of time

all of the following are true of an annuity owner except

the owner must be the party to receive benefits

what happens if a deferred annuity is surrendered before the annuitization period

the owner will receive the surrender value of the annuity

annuities differ from life insurance in all of the following ways except

they are purchased with premiums

which of the following is true regarding the annuity period

it may last for the lifetime of the annuitant

equity indexed annuities

seek higher returns

the annuitant dies while the annuity is still i 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

if an annuitant dies before annuitization occurs, what will the beneficiary receive

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

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

under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?

installments for a fixed period

why is an equity indexed annuity considered to be a fixed annuity?

it has a guaranteed minimum interest rate

which of the following best describes a pure life annuity settlement option

pure life provides payments for as long as the annuitant is alive

which two terms are associated directly with the way an annuity is funded

single payment or periodic payments

which of the following types of annuities will generally provide the highest monthly income?

straight life

which of the following is true for both equity indexed annuities and fixed annuities

they have a guaranteed minimum interest rate

which of the following products requires a securities license

variable annuity

which of the following ultimately determines the interest rates paid to the owner of a fixed annuity

insurer's guaranteed minimum rate of interest

all of the following statements are true regarding installments for a fixed period annuity settlement option except

it is a life contingency option

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

which of the following is true regarding the accumulation period of an annuity

it is a period during which the payments into the annuity grow tax deferred

jack and jill are twins, when their grandfather dies, he left each of them $100,000, which they used to purchase an annuity. when they retire, since each select the life income option, which will receive the larger monthly annuity payment

jacks payment will be larger

a couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. should one of them die, the other would still like to continue receiving benefits. which settlement option should they choose

joint and survivor

a couple receives a set amount of income from their annuity. when the wife dies, the husband no longer receives annuity payments. what type of annuity did the couple buy?

joint life

your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. how soon can he begin receiving income payments

no later than 1 year from the time of purchase

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

pay-in period

an individual buys a flexible premium deferred life annuity with the 20 year period certain. what would his beneficiary receive if he died 5 years after beginning the annuity phase?

payments for 15 years

which of the following is not true about a joint and survivor annuity benefit option

payments stop after the first death among the annuitants

a married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. when the wife dies, payments stop. What settlement option did they select?

joint and survivor

if an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to

live at least to his life expectancy

an agent selling variable annuities must be registered with

FINRA

all of the following statements about equity index annuities are correct except

the annuitant receives a fixed amount of return

in a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment

the annuitant will receive the higher of either the guaranteed minimum rate or current rate

the main difference between immediate and deferred annuities is

when the income payments begin

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

depreciation period

which of the following products provides income for a specified period of years or for life, and protects a person against outliving his or her money?

an annuity

the form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called

life income with a period certain

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

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