Chapter 7 Quiz

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

It has a guaranteed minimum interest rate.

In an annuity, the accumulated money is converted into a stream of income during which time period?

Annuitization period

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

The owner will receive the surrender value of the annuity.

What is the penalty for excessive contributions to an IRA?

6%

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

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

The beneficiary

A 403(b) plan, commonly referred to as a TSA, is available to be used by:

Teachers and not-for-profit organizations

What are the 2 distinct periods of an annuity?

Accumulation period and annuitization period

If a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid?

The annuitant's 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.

Who is an annuitant?

The person on whose life expectancy the annuity is written and who receives benefits from the annuity

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. What is TRUE?

The cash value will be paid to the annuitant's estate.

An agent selling variable annuities must be registered with:

FINRA

What are the 2 types of annuities based on when the annuity payments begin?

Immediate and deferred annuities

What best describes what the annuity period is?

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