Annuities Flashcards
How are annuities classified depending on how many lives they cover?
Single life and multiple life annuities.
In an annuity, the accumulated money is converted into a stream of income during which phase?
Annuitization period.
Can a business or a corporation be an annuitant?
No, an annuitant must always be a natural person.
What are the two types of refund life annuities?
Cash refund and installment refund.
How long will a life annuity with a 15-year period certain pay?
For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years.
What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?
STRAIGHT LIFE
With a single premium deferred annuities, when will the annuity payments become available?
No sooner than 1 year after the annuity purchased.
What is a disadvantage of owning a fixed annuity, as opposed to variable?
In times of inflation, the benefit of a fixed annuity will have decreased purchasing power.
Regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?
The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant’s death.
Who receives income payments from an annuity?
Annuitant.
What causes a variable annuity benefit to vary?
The annuity’s underlying investments.
What are the two phases of an annuity?
Accumulation and annuitization (or pay-in and pay-out).
What are the accumulation units in annuities?
Ownership interest in the separen account ( instead of buying shares, annuity holder purchases accumulation units).
What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and ceases at the annuitants death?
Pure life.
What type of license(s) is /are required in order to sell variable annuities?
A life insurance license and a securities license.
An individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does this person have?
Annuity.
What is the main reason for purchasing an annuity?
To provide an income that the annuitant cannot outlive.
If the annuitant dies before the annuitization period starts, what will the beneficiary receive?
Either the amount paid into the annuity or the cash value, whichever is greater.
What type of annuity requires an agent to have a securities license?
Variable annuity.
What type of annuity can be purchased with a single premium?
Immediate annuity.
How Kobe is income paid under a pure life annuity?
Only for the life of the annuitant.
In flexible premium payment annuities, the term “flexible” refers to what?
Amount of premium.
If an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity Is that?
……
Whose life expectancy is taken into consideration in an annuity contract?
Annuitant.
Who bears the investment risk in a fixed annuity?
The insurer.
Who posses all the rights in an annuity?
Annuity owner.
What type of annuity credits it’s interested based upon an index such as S&P 500?
Equity indexed annuity.
What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?
Life income with period certain.
What is the difference between a single premium and a flexible premium payment options in a deferred annuity?
The number of payments that purchased the annuity.
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
Beneficiary.
If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?
Annuitant’s estate.
An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is know as what type of annuity?
Flexible premium deferred annuity.
If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the annuity owner receive as part of the annuity payment?
Current.
What are the two classification of annuities according to the time when annuity payments begin?
Immediate and deferred.
How soon can income begin in an immediate annuity?
No later than 1 year from the time of annuity purchase.
