Annuities-Exam FX 6 Questions
Guaranteed surrender value
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
Surrender Charge
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?
The owner must be the party to receive benefits.
All of the following are true of an annuity owner EXCEPT
Equity Indexed Annuity.
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what affect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
2.5%
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?
Retirement plans
Annuities can be used to fund which of the following?
It is a percentage of the cash value and decreases over time.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
The beneficiary
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The cash value will be paid to the annuitant's estate.
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
An index like Standard & Poor's 500.
The minimum interest rate on an equity indexed annuity is often based on
The annuitant must be a natural person.
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 owner will receive the surrender value of the annuity.
What happens if a deferred annuity is surrendered before the annuitization period?
The insurance company's general account
When a fixed annuity owner pays pays a monthly annuity premium to the insurance company, where is this money placed?
Annuitant
When an annuity is written, whose life expectancy is taken into account?
Only the annuity owner
Which of the following can surrender a deferred annuity contract?
Depreciation period
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
It would not occur in a deferred annuity.
Which of the following is NOT true regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.
Which of the following is TRUE regarding the accumulation period of an annuity?
Pay-in period
Which of the following is another term for the accumulation period of an annuity?
The owner is guaranteed a fixed interest rate for a specific period of time.
Which of the following is true regarding a market value adjusted annuity?
Insurer's guaranteed minimum rate of interest
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Creating an estate
Which of the following will NOT be an appropriate use of a deferred annuity?