Annuities

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

A

If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur? A The owner will receive the premium payments that have been paid into the annuity, plus any interest, minus a surrender charge. B A surrender charge will be imposed that is equal to 3 of the owner's monthly annuity payments. C A surrender charge will not be imposed because the account has been open for at least 1 year. D The owner will forfeit any premiums he has paid into the account, but will receive any interest earned on the account.

A

In an annuity, the accumulated money is converted into a stream of income during which time period? A Annuitization period B Payment period C Amortization period D Conversion period

A

The term "fixed" in a fixed annuity refers to all of the following EXCEPT A Death benefit B Guaranteed rate of interest C Equal annuity payments D Amount and length of payments

A

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

A

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

What is the advantage of having a qualified annuity? A Higher dividends B Favorable tax treatment C No filing with the IRS D Receiving a lump-sum settlement tax free

B

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

B

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level? A Annuitization B Bail-out C Surrender D Nonforfeiture

B

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

B/

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 A Joint life annuity. B Life income with period certain. C Life income with refund. D Joint and survivorship.

B/

All other factors being equal, which of the following types of annuities will generally provide the highest monthly income? A Joint and Survivor B Installment Refund C Life with a 10-year Period Certain D Straight Life

D

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? A Annuitization period B Pay-out period C Liquidation period D Depreciation period

D

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A It is a life contingency option. B The beneficiary receives the remainder of the principal amount upon the annuitant's death. C Payments can be made in installments and as a single cash refund. D It provides a higher monthly benefit than a pure life annuity.

D

Underlying assets for variable annuity contracts must be maintained in what type of account? A General account B Fiduciary account C Securities account D Separate account

D/