Annuities

Which of the following is NOT n allowable 1035 exchange ?

A whole life insurance policy is exchanged for a term insurance policy.

Which of the following is true regarding taxation of dividends on participating policies

Dividends are not taxable.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for premiums.

Which of the following is not true regarding policy loans?

Money borrowed from the cash value is taxable.

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

Single payment or periodic payments

Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar lifestyles and are in good health. Which of the following is true with respect to their monthly annuity?

The mans payment will be larger.

Which of the following is true regarding a modified guaranteed annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

If a person purchases a flexible premium deferred annuity, when is the soonest that income payouts will begin?

after 1 year

Which of the following would most directly affect the purchasing power of benefits paid on a fixed annuity?

economic inflation

What type of annuity can be purchased with a single premium and provides benefit payments immediately?

immediate

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?

spouse