CH 8 Exam

An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefits?

1 month

How soon can the benefit payments begin with a deferred annuity? Anytime after date of purchase Anytime within 12 months after date of purchase A minimum of 6 months after date of purchase A minimum of 12 months after date of purchase

A minimum of 12 months after date of purchase

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? Payout period Accumulation period Deferred period Growth period

Accumulation Period

What is the nonforfeiture value of an annuity before annuitization? All premiums paid All premiums paid plus interest All premiums paid minus any withdrawals and surrender charges All premiums paid, plus interest, minus any withdrawals and surrender charges

All premiums paid, plus interest, minus any withdrawals and surrender charges

Which of the following is considered to be the period when the accumulated value in an annuity is paid out? Annuitization phase Accumulation phase Principal phase Period certain phase

Annuitization phase

Fixed period settlement options are considered to be a form a a(n)

Annuity

Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called

Annuity certain

Which of these annuities require premium payments that vary from year to year? a. flexible premium immediate annuity b. flexible premium deferred annuity

B

Which of these will have the highest monthly payout upon annuitization? a. life with period certain b. joint and survivor life c. Straight life d. joint life

C

An annuitant is guaranteed to NOT outlive their benefits with a(n)

Guaranteed lifetime withdraw benefit

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?

Guaranteed lifetime withdraw benefit

Which type of annuity stops all payments upon the death of the annuitant? Life annuity Period certain annuity Cash refund annuity Joint and survivor annuity

Life Annuity

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them? Life annuity certain Secure life annuity Irrevocable survivor annuity Guaranteed life annuity

Life annuity certain

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies?

Life only

During the accumulation period, who can surrender an annuity?

Policyowner

What is the primary reason for buying an annuity?

Provide future economic security

Which market index is normally associated with an indexed annuity's rate of return?

S&P 500

Which of these statements regarding the annuitant is CORRECT?

THe annuitant's life expectancy determines the annuity payments.

Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?

Temporary annuity certain

If the annuitant dies before the annuity start date,

The premiums paid plus interest earned will be given to the beneficiary.

Which of these is NOT considered to be a purpose of an annuity a. Annuities are intended to create an estate b. annuities are intended to liquidate an estate

a. Annuities are intended to create an estate

Fixed annuities provide all of the following EXCEPT a. guaranteed interest b. retirement funds c. hedge against inflation d. tax advantage

c

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? a. Payments cease 5 years after the annuitant's death b. During periods of inflation, annuitants will experience an increase in purchasing power of their payments c. During periods of inflation, annuitants will experience a decrease in purchasing power of their payments d. Payment amounts can be unpredictable from month to month

c

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? a. Fixed period b. interest only c. installment refund d. life income

d. life income

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's surrender charge death benefit cash refund income period

income period

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made? Variable annuity Refund annuity Rebate annuity Return annuity

refund annuity

Who assumes the investment risk with a fixed annuity contract? a. owner b. annuitant c. insurer d. beneficiary

C. insurer

Which of the following is an annuity that is linked to a market-related index?

Equity-indexed annuity

The taxable portion of each annuity payment is calculated using which method? Exclusion Ratio Taxable Ratio Cost Basis Tax Basis

Exclusion Ratio

Under a non-qualified annuity, interest is taxed after the

Exclusion ratio has been calculated