Annuities

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

it is a life contingency option

all of the following are true of an annuity owner except

the owner must be the party to receive the benefits the "owner" is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity. the owner, however, does not have to be the one who receives the benefits; it could be the annuitant (if different from the owner) or beneficiary

annuities can be used to fund which of the following

retirement plans since annuities are a popular means to provide retirement income, they are often used to fund qualified retirement plans

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 owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity.

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

the owner will receive the surrender value of the annuity if a deferred annuity is surrendered prior to annuitization, the surrender value of the annuity is guaranteed according to the nonforfeiture provision.

which of the following products requires a securities license?

variable annuity

the main difference between immediate and deferred annuities

when the income payments begin

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. the accumulation period is the period of time over which the annuitant makes payments (premiums) into an annuity. this is the period of time during which the payments earn interest and grow tax deferred (which would be the case in a deferred 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 period certain if the annuitant dies before the period certain, the payments continue to a beneficiary or the estate for the remainder of the period certain

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

it would not occur in a deferred annuity

which of the following is true regarding the annuity period

it may last for the lifetime of the annuitant

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 min rate or current rate with a fixed annuity, the insurer invests the principal and gives the annuitant a guaranteed interest rate based on a minimum rate specified in the annuity or current interest rate, whichever is higher

a marred 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 under a joint settlement option, payments would stop at the first death, but under the joint and survivor, payment would continue until both recipients die. usually, the surviving beneficiary receives 1/2 or 2/3 of the amount received when both beneficiaries were alive.

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

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

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