ANNUITIES

Within how many days must an applicant for an annuity contract receive the disclosure document and the buyer's guide if the application was not taken in a face-to-face meeting?

5 business days

The equity in an equity index annuity is linked to

An index like Standard & Poor's 500

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate.

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?

Joint life

How long is the free-look period for an annuity contract if the buyer's guide and disclosure document are not provided at the time of application?

15 days

What are the disclosure requirements if the application for the annuity has been received as a result of a direct mail solicitation?

The requirement is met if the disclosure document and the buyer's guide were included in the mailing.

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

Beneficiary

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

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value.

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

Annuitization period

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

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

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 minimum rate or current rate.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant.

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed.

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

3%

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.

If a contract holder returns an annuity contract within the free look period, he or she

Will receive a refund of all funds paid.

When an annuity is written, whose life expectancy is taken into account?

Annuitant

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?

Joint and survivor

Equity indexed annuities

Seek higher returns

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

How long is the free look period for annuities if the contract holder is older that 65?

30 days

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

Which of the following will NOT be an appropriate use of a deferred annuity?

Creating an estate

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

It is a life contingency option.

If an annuity contract has defaulted due to nonpayment of premiums, when can it be reinstated?

Within 1 year

A contract holder is 67 years old when he applies for an annuity contact. How long will his free-look period be?

30 days

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

Annuitization period

What license or licenses are required to sell variable annuities?

Both a life license and securities license

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

Joint life annuity

What is the advantage of having a qualified annuity?

Favorable tax treatment

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

Which of the following best describes a bail-out provision?

It allows the owner to surrender the annuity without a charge.

Which of the following is NOT true about a group annuity?

It can be owned by individual employees.

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

It has a guaranteed minimum fixed interest rate

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?

Installments for a fixed peiod

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?

The insurance company's general account

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

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?

Joint and Survivor

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?

The surrender value should be equal to 100% of the premium paid, minus any prior withdrawal and surrender charges.

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?

Bail-out

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies.

Which of the following products requires a securities license?

Variable annuity

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment.

Which of the following is true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

In reference to fixed annuities, what comprises most of a life insurance company's general account?

Conservative investments like bonds

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.

A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following?

Nonforfeiture option guarantees that the owner will receive a surrender value of the contract