Chapter 8 exam questions
In annuities accumulation period may A. Continue after the purchase payments stop B. Continue after the benefit payments start C. Continue after the annuitant dies D. Continue after the annuity has been surrendered
A
Under which circumstances the interest rate guaranteed within a market value adjusted annuity? A. When the contract has been held for theperiod specified in the policy B. For the entire length of the contract C. Never D. On the cash value has reached a stated minimum amount
A
Interest is credited to a fix annuity no lower than the A. Variable contract rate B. Contract guaranteed rate C. Current rate of inflation D. Prime rate
B
The annuitant is a single premium deferred annuity (SPDA) A. Receives immediate benefit payments B. Makes only one premium payment C. Can make one tax-free withdrawals and it will be principle is recovered D. It's also the beneficiary
B
Sarah age 88 is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payment will be derived primarily from funds that were A. Obtained from the states guaranty was association B. Accumulated from the invested principle C. Given up by the annuitants refund beneficiary D. Not distributed to life annuitants who died before life expectancy
D
What is the tax treatment of benefit payments for a non-qualified annuity? A. Benefit payments are always fully taxable B. Benefit payments are subject to taxes only prior to age 70 1/2 C. Benefit payments must begin at age 59 1/2 to avoid penalty D. Benefit payments received after 70 1/2 areee always text exempt
A
When an annuity contract has been fully surrendered how old is surrender charges affect the final contract settlement? A. Final contract settlement will be reduced B. Final contract settlement will be increased C. Final contract settlement will not be affected D. Final contract settlement will be held in escrow until surrender charges are paid
A
What is another term used for a pure life annuity A. Annuity certain B. Immediate annuity C. Life income D. Joint annuity
C
What is the effect of the market value adjustment in a market value adjustment annuity? A. Transfers the tax liability to the owner B. Allows owner to periodically address the investment risk C. Transfers some of the investment risk to the policy owner D. No risk
C
Which event triggers a deferred annuity to start making benefit payments to the annuitant A. When the owner dies B. When the contracts cash value exceeds the cost basis C. When the contract is annualized D. Cash surrender of the annuity
C
Which of the following contracts offer deferred taxation flexible payments a guaranteed interest rate and death benefits equal to the cash value? A. Variable life policy B. Modified life policy C. Flexible premium fixed rate D. Immediate fixed annuity
C
Which of the following is associated with an immediate annuity? A. Tax free benefit payments B. Installment premium payments C. Lack of an accumulation period D. Lump sum benefit
C
The exclusion ratio determines A. How long an annuitant receives benefit payments B. If an annuity is eligible for 1035 exchange C. The interest rate for in an annuity D. The amount of in annuity payments subject to income tax
D
When determining the accumulation value of it deferred annuity the total is calculated by taking the premium paid plus interest earned minus A. Bail out option charge B. Surrender charges C. Taxes owed D. Expenses and withdrawals
D
Which statement is incorrect concerning a tax sheltered annuity (TSA) ? A. Participants make payments from salary reductions B. Normally used by charitable educational and religious organizations C. Also known as 403 plans D. Annual investment gains are included in participants gross income
D