chapter 7 Annuities
P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?
A straight life deferred annuity A straight life annuity An immediate annuity A deferred annuity *Immediate annuity
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase Benefit payments start within 5 years of initial purchase Normally tied to a specific equity or stock index Periodical contributions begin immediately *Benefit payments start within one payment period of purchace
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n):
Cash Refund Installment Refund Straight Life annuity Life Annuity with Period Certain *Straight life annuity
Which of the following are Equity indexed annuties typically invested in?
Corporate Bonds Money Market accounts Municipal Bonds S&P 500 *S&P 500
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income for a fixed period stated in the contract Income that cannot be outlived by the owner Inflation protection Tax-free income *Income that cannot be outlived by the owner
Which of these statements concerning an individual Straight Life annuity is accurate?
Life expectancy of the annuitant is not a factor The payments are received tax-free Only available to employees of nonprofit charitable, educational, and religous organizations Payments are made to an annuitant for life * Payments are made to an annuitant for life
Which of the following is NOT included in an annuity contract?
Nonforfeiture benifit Free-Look period Beneficiary AD&D rider *AD&D rider
Which type of contract liquidates an estate through recurrent payments?
Universal life insurance Whole life insurance Annuity 401(K) Annuity
How does an indexed annuity differ from a fixed annuity?
Fixed annuity owners receive credited interest tied to the fluctuations of the linked index indexed annuity owners may receive credited interest tied to the fluctuations of the linked index Fixed annuity owners have a seperate investment account Indexed annuity owners receive annual dividends * Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
An immediate annuity consists of a :
variable premium flexible premium single premium deferred premium *single premium
