Chapter Seven Exam
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called
nonforfeiture options
The authority to change the beneficiary in an individual annuity lies with the
owner
The interest credited to the cash values of personally-owned non-qualified annuities is considered
tax deferred
Taking a sum of money and decreasing it in size is called
capital liquidation
The surrender charge on many deferred annuity contracts are waived when the
annuitant dies or becomes disabled
Which of the following would NOT be appropriate for an immediate annuity?
A parent saving for a child's college
Which of the following is NOT a valid contract exchange?
An annuity exchanged for a life insurance policy
A single-life annuity only has ONE
Annuitant
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?
Annuitant
A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?
If the interest rate falls below a specified level, the surrender charge is waived
A retired couple would like to maximize the income derived from their life savings and have it payable until they both die. Which annuity would be their best choice?
Joint and survivor annuity
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
What does a fixed annuity offer protection against?
Savings depletion because of longevity
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)
Single Premium Deferred Annuity
Which statement concerning a deferred annuity contract is correct?
The owner can be the beneficiary, annuitant, or neither
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
make additional payments into the annuity
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were
not distributed to life annuitants who died before life expectancy
Who typically makes the purchase payments in an individual annuity?
owner
An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?
surrender charge
The interest paid during an annuity's payout period is considered
taxable as ordinary income