Chapter 8

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called a. installment refund annuity b. straight life annuity c. cash refund annuity d. joint life annuity

a

What is considered to be a characteristic of an immediate annuity? - benefit payments start within one payment period of purchase - benefit payments start within 5 years of initial purchase -normally tied to a specific equity or stock -periodical contributions begin immediately

a

Which of the following statements regarding a tax sheltered annuity is INCORRECT? a. the income from the TSA is received tax-free b. the amount contributed is deductible from taxable income c. the interest earnings are tax deferred d. the tax-sheltered annuity is available to employees of non-profit organization

a

which of the following is a characteristic of a variable annuity? a. underlying equity investments b. does not have surrender chargers c. does not provide a transfer of ownership d. selling this product requires only a life license

a

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives a. No refund of money b. the contract surrender value at the time c. all premiums paid up to the date of termination d. Reimbursement of all expenses deducted from the contracted value

b

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? a. fixed period b. fixed deferred c. fixed immediate d. fixed variable

b

An immediate annuity consists of a a. variable premium b. flexible premium c. single premium d. deferred premium

c

An individual who purchases a life annuity is given protection against: a. inflation b. the risk of dying prematurely c. the risk of living longer than expected d. the risk of not having enough retirement income

c

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? a. immediate b. retroactive c. deferred d. universal

c

The annuity that represents the largest possible monthly payment to an individual annuitant is a: a. cash refund b. installment refund c. straight life annuity d. life annuity with period certain

c

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? a. deferred b. flexible c. variable d. fixed

c

Which type of contract liquidates an estate through recurrent payments? a. universal life insurance b. whole life insurance c. annuity d. 401 k

c

an immediate annuity consists of a a. variable premium b. flexible premium c. single premium d. deferred premium

c

Equity Indexed annuities are invested in which of the following: a. insuerers general account b. savings bonds c. insured's general account d. S&P 500

d

The type of annuity that can be purchased with one monetary deposit is called a(n) a. single deposit annuity b. single premium annuity c. fixed annuity d. immediate annuity

d

Which of the following is NOT included in an annuity contract? - nonfortfeiture benefit -free look period -beneficiary -AD&D rider

d

Which of the these is an element of a single premium annuity? -deffered payment -lump sum payment -fixed income -tax deductible

lump sum payment