14 Flashcards

1
Q

Period when accumulated funds converted into income payments

A

Annuity period

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2
Q

It is true regarding accumulation period that

A

It is period during which payments grow tax deferred

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3
Q

The owner of annuity must be the party to receive benefits

A

False owner purchases and has rights but doesnt have to rec benefits

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4
Q

Pres starting annuity decides corporation will be annuitant. Annuitant

A

Must be a natural person

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5
Q

Not true of acc period of annuity

A

Would not occur in deferred annuity

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6
Q

Whose life expectancy taken into account w annuity

A

Annuitant

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7
Q

During accumulation period funds are paid

A

Into annuity

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8
Q

During annuity period

A

Funds are paid out to the annuitant

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9
Q

Annuity income is based upon the following

A

Amount of premium paid or cash value accumulated, frequency of payment, interest rate, annuitant’s age and gender

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10
Q

If life expectancy longer

A

Smaller income installments

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11
Q

65 yr old male has higher annuity income payments than

A

45 year old male or 65 year old female as women live longer statistically

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12
Q

Shorter life expectancy equals

A

Higher benefit

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13
Q

Longer life exp equals

A

Lower benefit

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14
Q

Annuities are purchased to provide supplement

A

Retirement income

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15
Q

Annuities are purchased to fund or help

A

College education or any situation requiring steady stream of income in future

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16
Q

Annuities are used to provide

A

Structured settlements which would take on form of court settlement arising from civil lawsuit or state lottery winner

17
Q

Function of annuity is that of

A

Liquidating a principal sum regardless of how it was accumulated

18
Q

Can be classified according to how prem are paid into the annuity how invested and how benefits are paid out

A

Annuities

19
Q

Classification of annuities

A

Premium payment method: single premium vs periodic

20
Q

When income payments begin: immediate vs deferred

A

Classification of annuities

21
Q

How premiums are invested: fixed vs variable

A

Classification of annuities

22
Q

Disposing of proceeds: pure life annuity certain or life refund annuity

A

Classification of annuities

23
Q

Two ways to classify annuities

A

Single premium one lump
Periodic installments

24
Q

Periodic payment annuities can be either

A

Level premium where owner pays fixed installment or flexible premium where frequency varies and amount varies

25
Q

Annuities may be classified as

A

Fixed or variable depending on how payments are invested

26
Q

Guaranteed minimum rate of interest to be credited to purchase payments; income payments do not vary one payment to next; company guarantees specified dollar amount for each payment and length the of period as determined by settlement option chosen by annuitant

A

Fixed annuity

27
Q

Disadvantage to fixed annuities

A

Purchasing power may be eroded over time due to inflation

28
Q

Knows exact amount of each payment recd from annuity during annuity period

A

Level benefit payment amount

29
Q

Hedge against inflation and variable from standpoint that annuitant may rec different rates of return on funds paid into annuity

A

Variable annuity