Life Ch. 8 Annuities

The interest earned on the cash value of an individually-owned annuity is considered to be a tax credit tax-deferred tax-deductible tax-exempt

Interest credited to the cash values of annuities are deferred until distribution.

During an annuity's liquidation phase, the annuitant normally receives nothing receives benefit payments at stated intervals can borrow against the cash value can increase the premium payout period

An annuitant normally receives benefit payments at regular intervals during the liquidation phase of an annuity.

A product which can offer its owner a lifetime income stream is called an _______. accumulation annuity ordinary life insurance policy endowment

An annuity can offer its owner a lifetime income stream.

An owner has a life annuity which provides benefit payments for a minimum time period, no matter when the annuitant dies. The feature of this annuity is called fixed period period certain installment refund straight life

An annuity with period certain provides a life annuity with an extra guarantee for a certain period of time. If the annuitant dies it will still guarantee payments to the survivor for another 10,15, 20 years.

Annuitization can be described as the transfer of risk creating a tax-free income accumulating monies for a future date converting a cash value into periodic income

Annuitization can be described as converting a cash value into periodic income.

John owns a deferred annuity and is currently paying no income taxes on the investment gains. This annuity is now in the ______ phase. accumulation nontaxable deferred annuitization

No income taxes are paid on a deferred annuity's earnings during the accumulation phase.

The interest paid during an annuity's payout period is considered nontaxable taxable as ordinary income taxable as capital gains tax-deductible

The interest paid during an annuity's payout period is considered taxable as ordinary income.

Who assumes the investment risk in a Variable Life annuity? FINRA Owner of the annuity contract Insurer Producer

The owner of a Variable Life annuity assumes the investment risk.

When does interest income in a deferred annuity get reported for federal income taxes? Never After the principal has been exhausted When the distributions are received During the accumulation phase

The portion of the annuity payment that represents interest-earned is taxable. The portion that represents the return of principal is not taxed.

A deferred annuity is used to accumulate funds for the future create an immediate source of income convert a single lump sum into income create an immediate estate

The purpose of a deferred annuity is to accumulate funds for the future.

Which of these is NOT a characteristic of a Straight Life annuity? Payments continue until the annuitant dies No death benefit Age and gender are factors of the income amount The beneficiary will receive a refund if the annuitant dies during the pay-out phase

There are no refunds given to a beneficiary if the annuitant dies during the pay-out phase.

Which assumption concerning the investment risk of a Fixed Dollar Life annuity is correct? Annuitant assumes no inflation risk Insurer assumes the inflation risk Annuitant assumes the investment risk Insurer assumes the investment risk

With a Fixed Dollar annuity, the insurance company assumes the investment risk and the annuitant assumes the inflation risk.