CH 7- Annuities
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners may receive credited into
Which of the following are Equity Indexed annuities typically invested in?
S&P 500
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
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
A 45 year old-woman won $100,000 in a scratch off lottery ticket. She purchased an annuity that will pay her $1500 per month beginning at age 60. Which of these annuities did this woman purchase?
Deferred fixed annuity
The payments on Q's annuities are no less than $250 quarterly. Which of the following annuities does Q own?
Flexible Installment Deferred
All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT
Income derived from the TSA is received incometax-free
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life annuity with Period Certain
Which of these is an element of a single Premium annuity
Lump-sum payment
A (blank) annuity pays benefits based on units rather than stated dollar amounts.
Variable
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
What is the basic funtcion of an annuity?
the systematic liquidation of accumulated funds
A variable annuity has which of the following characteristics?
underlying equity investments
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
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 Deffered
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)
Immediate annuity
