Annuities

An immediate annuity consist of a:

Single Premium

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n):

Straight Life annuity

What is the basic function of an annuity?

The systematic liquidation of accumulated funds

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible deferred installment

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners receive credit interest tied to the fluctuations of the linked index

What type of annuity has a cash value that is based upon the performance of its underlying investment funds?

Variable

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)

installment refund annuity

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?

deferred

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

Does not have to make any further payments

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?

Fixed Deferred

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that can not be outlived by the owner

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

Which of these is an element of a single Premium annuity?

Lump-sum payment

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium

An individual who purchases a Life annuity is given protection against:

The risk of living longer than expected

A variable Annuity has which of the following characteristics?

Underlying equity investments

A contract owner terminates an annuity before the income payment period begins. The owner will then receive?

the current contract surrender value