Chapter: Annuities

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 like to purchase a(n) A. flexible annuity B. immediate annuity C. equity indexed annuity D. variable annuity

C

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? A. all benefits will be forfeited B. the cash value will be paid to the state government C. the cash value will be paid to the annuitant's estate D. the premium value will be paid to the annuitant's estate

C

what determines the penalty for surrendering a market value adjusted annuity prematurely? A. there are no penalties imposed for surrendering annuities prematurely B. the guaranteed minimum interest rate provided in the contract C. the current interest rate at the time of surrender D. the flat fee determined by an index of interest gains and the amount of time the annuity would take to mature

C

when a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed? A. each contract's separate account B. the annuity owner's account C. the insurance company's general account D. forwarded to investor

C

which of the following is NOT true about a joint and survivor annuity benefit option? A. this option guarantees income for two or more recipients B. the surviving annuitant may receive reduced payments C. payments stop after the first death among the annuitants D. a period certain option may be included

C joint and survivor mean one person and among the others in the family. One dies and the payments would go to the rest

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? A. installment refund B. cash refund C. installments for a fixed period D. installments for a fixed amount

C they mentioned about select the time period for the benefits

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? A. joint and survivor B. life with period certain C. joint limited annuity D. joint life

D only 1 person receive benefit

which of the following is NOT true regarding the accumulation period of an annuity? A. it is also known as the pay-in period B. it would not occur in a deferred annuity C. it is the period during which the annuity payments earn interest D. it is the period over which the owner makes payments into an annuity

B

equity indexed annuities A. seek higher returns B. are more risky than variable annuities C. are security instruments D. invest conservatively

A

the annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premium paid. Which of the following is TRUE? A. the cash value will be paid to the annuitant's estate B. the premium value will be paid to the annuitant's estate C. all benefits will be forfeited D. the cash value will be paid to the state government

A

the main difference between immediate and deferred annuities is A. when the income payments begin B. how the annuity is purchased C. the number of insureds D. the amount of each payment

A

which of the following is another term for the accumulation period of an annuity? A. annuity period B. pay-in period C. premium period D. liquidation period

B

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? A. termination penalty B. bail out charge C. inflation adjustment D. surrender charge

D

which of the following is TRUE regarding the accumulation period of an annuity? A. it is a period during which the payments into the annuity grow tax deferred B. it is also referred to as the annuity period C. it is a period of time during which the beneficiary receives income D. it is limited to 10 years

A

The minimum interest rate on an equity indexed annuity is often based on A. an index like Standard and Poor's 500 B, the returns from the insurance company's separate account C. the annuitant's individual stock portfolio D. the insurance company's general account investments

A

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? A. joint life B. life with period certain C. straight life D. joint and survivor

D

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders? A. 2% B. 2.5% C. 3% D. whatever interest rate the company deems appropriate

B cuz it's guaranteed promise percentage

if an annuitant dies before annuitization occurs, what will the beneficiary receive? A. either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount B. amount paid into the plan C. cash value of the plan D. either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

D

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? A. straight life B. joint and survivor C. joint annuity D. cash refund annuity

B

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits? A. variable amount B. fixed period C. fixed amount D. variable period

C

if an annuitant dies before annuitization occurs, what will the beneficiary receive? A. amount paid into the plan B. cash value of the plan C. either the amount paid into the plan or the cash value of the plan, which ever is the greater amount D. either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount

C

in a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? A. the annuitant will only receive the guaranteed minimum specified in the contract B. the annuitant will receive the higher of either the guaranteed minimum rate or current rate C. the annuitant will always receive the current interest rate D. the annuitant will receive the lower of either the guaranteed minimum rate or current rate

B

which of the following products will protect an individual from outliving their money? A. permanent life insurance B. annuity C. joint and survivor policy D. adjustable life policy

B

In an annuity, the accumulated money is converted into a stream of income during which time period? A. amortization period B. conversion period C. annuitization period D. payment period

C

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A. The beneficiary will receive the greater of the money paid into the annuity or the cash value B. The owner's estate will receive the money paid into the annuity C. The insurance company will retain the cash value and pay back the premiums to the owner's estate. D. The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary.

A

When an annuity is written, whose life expectancy is taken into account? A. Annuitant B. Beneficiary C. Life expectancy is not a factor when writing an annuity D. Owner

A

if a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid? A. the annuitant's estate B. the next of kin C. the state government D. the insurance company

A

annuities can be used to fund which of the following? A. group life insurance B. estate creation C. retirement plans D. variable life insurance

C

which of the following is TRUE for both equity indexed annuities and fixed annuities? A. both are considered to be more risky than variable annuities B. they invest on a conservative basis C. they have a guaranteed minimum interest rate D. they are both tied to an equity index

C

the policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option shiuld the policyowner choose? A. fixed amount option B. interest only option C. life income with period certain D. joint and survivor

D

what happens if a differed annuity is surrendered before the annuitization period? A. the owner will only receive a refund of premium B. the insurer can only apply the surrender value toward another annuity C. deferred annuities cannot be surrendered prior to the annuitization period D. the owner will receive the surrender value of the annuity

D

which of the following is NOT true regarding the annuitant? A. the annuitant's life expectancy is taken into consideration for the annuity B. the annuitant receives the annuity benefits C. the annuitant must be a natural person D. the annuitant cannot be the same person as the annuity owner

D

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? A. the contract can be issued without an annuitant B. the annuitant must be a natural person C. a corporation can be an annuitant as long as it is also the owner D. a corporation can be an annuitant as long as the beneficiary is a natural person

B

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 A. joint and survivor annuity B. deferred annuity C. pure annuity D. joint life annuity

D

which of the following best describes what the annuity period is? A. the period of time from the effective date of the contract to the date of its termination B. the period of time during which accumulated money is converted into income payments C. the period of time from the accumulation period to the annuitization period D. the period of time during which money is accumulated in an annuitya

B

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? A. deferred B. variable C. immediate D. flexible

C within 1 year is called immediate

why is an equity indexed annuity considered to be a fixed annuity? A. it has modest investment potential B. it has a fixed rate of return C. it is not tied to an index like the S and P 500 D. it has a guaranteed minimum interest rate

D equity indexed annuity consider two benefits: seek higher returns or guaranteed minimum interest rate

if the annuitant dies during the accumulation period, who will receive the annuity benefits? A. the beneficiary B. annuity owner C. the insurance company D. the annuitant's estate

A

which of the following is TRUE regarding the annuity period? A. it is the period of time during which the annuitant makes premium payments into the annuity B. it may last for the lifetime of the annuitant C. during this period of time the annuity payments grow interest tax deferred D. it is also referred to as the accumulation period

B

which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? A. insurer's guaranteed minimum rate of interest B. investment performance of the company C. investment performance of the insured D. statewide predetermined annual interest rate

A

all of the following are true of an annuity owner EXCEPT A. the owner pays the premiums on the annuity B. the owner has the right to name the beneficiary C. the owner is the party who may surrender the annuity D. the owner must be the party to receive benefits

D

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? A. immediate annuity B. variable annuity C. flexible payment annuity D. deferred interest annuity

A

which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? A. depreciation period B. annuitization period C. pay out period D. liquidation period

A

which two terms are associated directly with the way an annuity is funded A. single payment or periodic payments B. increasing or decreasing C. immediate or deferred D. renewable or convertible

A

all of the following statements about equity index annuities are correct EXCEPT A. they have a guaranteed minimum interest rate B. the interest rate is tied to an index such as the standard and Poor's 500 C. they invest on a more aggressive basis aiming for higher returns D. the annuitant receives a fixed amount of return

D

all of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A. it will pay the benefit only for a designated period of time B. the payments are not guaranteed for life C. the insurer determines the amount for each payment D. it is a life contingency option

D

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? A. guaranteed surrender value B. no payments C. annuity dividends D. full premium refund without any charges

A

what happens if a deferred annuity is surrendered before the annuitization period? A. the owner will receive the surrender value of the annuity B. the owner will only receive a refund of premium C. the insurer can only apply the surrender value toward another annuity D. deferred annuities cannot be surrendered prior to the annuitization period

A

all of the following statements are true regarding installments for a fixed amount EXCEPT A. this option pays a specific amount until the funds are exhausted B. the annuitant may select how big the payments will be C. the payments will stop when the annuitant dies D. value of the account and future earnings will determine the time period for the benefits

C

if a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? A. it is a flat fee determined by the annuity owner when the annuity is purchased B. it will increase as the accumulation period increases C. it is a percentage of the cash value and decreases over time D. it is always 7% of the cash value

C

which of the following can surrender a deferred annuity contract? A. the beneficiary after the owner's death B. a deferred annuity cannot be surrendered C. only the annuity owner D. only the insurance company for nonpayment of premiums

C

which of the following is true regarding a market value adjusted annuity? A. there are no penalties for a premature surrender of the annuity B. it provides a level benefit payment C. the owner is guaranteed a fixed interest rate for a specific period of time D. the insurer bears all the market risk of changing interest rates

C

which of the following is NOT true regarding Equity Indexed Annuities? A. they earn lower interest rates than fixed annuities B. the insurance company keeps a percentage of the returns C. they have guaranteed minimum interest rates D. they are less risky than variable annuities

A

which of the following will NOT be an appropriate use of a deferred annuity? A. creating an estate B. accumulating retirement funds C. accumulating funds in an IRA D. funding a child's college education

A annuities do not create an estate, only liquidate - trả nợ