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LAH Course > Annuities > Flashcards

Annuities Flashcards

1
Q

What benefit does the installment refund option on an annuity certain payout allow the beneficiary?

A

To continue to receive the remainder of the monthly income benefits.

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2
Q

Which annuity allows for stock market appreciation with guaranteed downside protection?

A

An equity-indexed annuity

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3
Q

The contribution phase of an annuity is called the ______________ period.

A

accumulation period.

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4
Q

What type of annuity provides a predetermined income for life?

A

A fixed annuity

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5
Q

What licenses are required for an agent to sell variable annuities or variable life?

A

Both a life insurance license and FINRA Series 6 or 7 license are required.

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6
Q

What is another name for the annuity payout period?

A

The annuity phase

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7
Q

Who assumes the investment risk in a variable annuity contract?

A

The client or contract owner

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8
Q

True or False: The annuity owner and the annuitant do not need to be the same person.

A

True.

An annuity can be purchased for someone other than the owner.

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9
Q

True or False: An annuity with a 20-pay certain annuity payout guarantees at least 20 years of payments will occur.

A

True.

At least 20 years of payment are guaranteed to the annuitant, the beneficiary, or both.

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10
Q

Periodic annuity payments may be _______ or _________.

A

level or flexible.

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11
Q

What is another name for the annuity accumulation phase?

A

The pay-in phase

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12
Q

The ______________ rate is the percentage of the gain kept by an insurer, based on the overall return of an index.

A

The participation

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13
Q

What is another name for annuity surrender charges?

A

Back-end loads

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14
Q

n annuitant with a straight-life annuity dies after 9 years. How many years of benefit will his beneficiary receive?

A

$0. Straight-life payments cease on the death of the annuitant.

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15
Q

Interest earned with a deferred annuity grows on a _______________ basis.

A

tax-deferred basis.

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16
Q

A client dies soon after annuitizing with a straight-life payout option. Is there a death benefit to a beneficiary?

A

No. The contract is based on the annuitant’s life only.

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17
Q

Which annuity payout option pays the annuitant for life with no survivorship benefit?

A

The straight or pure life annuity payout

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18
Q

What is the risk of the straight-life annuity payout option?

A

There is no beneficiary payout after the annuitant’s death.

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19
Q

Identify the acronym: SPA

A

Single Premium Annuity

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20
Q

Which annuity payout would have the lower monthly income benefit–a 10- or 20-pay certain period?

A

The 20-pay certain period would have a lower payment since the guarantee is longer.

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21
Q

What payout option provides payments for the annuitant’s whole life, but will cease at death?

A

The Straight-Life Payout option

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22
Q

An annuitant with a 20-year certain annuity dies after 7 years, how many years of benefits will a beneficiary receive?

A

The beneficiary will receive the remaining 13 of the 20 years.

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23
Q

What annuity’s growth is dependent on the performance of securities in a separate account?

A

A variable annuity

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24
Q

Which annuity provides a guaranteed return–fixed or variable?

A

Fixed annuities

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25
Q

The payout phase of an annuity may also be referred to as the _________ phase.

A

annuity phase.

26
Q

What annuity payout option pays income to more than one party and stops upon death of any party listed on the contract?

A

The Joint Life option

27
Q

What is another name for a pure life annuity?

A

A straight life or life annuity

28
Q

Traditional contract assets are placed in the insurance company’s _________ account.

A

general account.

29
Q

The annuity benefit of a woman would be ____ than a man’s because a woman is expected to ______________.

A

The annuity benefit of a woman would be LESS than a man’s because a woman is expected to LIVE LONGER.

30
Q

What is the benefit of the Straight-Life payout option to the annuitant?

A

It provides the highest monthly income

31
Q

What is the annuity nonforfeiture value?

A

The value of an annuity minus any surrender fees

32
Q

What type of annuity is designed to pay income at a later date?

A

A deferred annuity

33
Q

All variable contract assets are placed in the insurance company’s __________ account.

A

separate account.

34
Q

What modification is made to the straight-life payout option to guarantee payments for a minimum number of years?

A

Attaching a period certain to a payout

35
Q

What is the only method used to fund an immediate annuity?

A

Lump-sum contribution

36
Q

Annuity premiums may be paid as a __________, or on a ________ basis.

A

Annuity premiums may be paid as a LUMP-SUM, or on a PERIODIC basis.

37
Q

Identify the acronym: SPDA

A

Single Premium Deferred Annuity

38
Q

Inflation risk would be a concern for an owner of a _______ annuity.

A

fixed annuity.

39
Q

A single premium annuity may also be called a __________ annuity.

A

lump-sum annuity.

40
Q

What annuity provides a monthly income that varies depending on market performance?

A

A variable annuity

41
Q

The cash refund option of an annuity certain payout provides the beneficiary a __________ refund of remaining benefits.

A

lump-sum

42
Q

Which annuity option does not guarantee an income for life, but rather an income for a predetermined number of years?

A

The Annuity Certain option

43
Q

An annuity is designed to protect a person against ___________ his income.

A

An annuity is designed to protect a person against outliving his income.

44
Q

At annuitization (payout), accumulation units are exchanged for _________ units.

A

annuity units.

45
Q

Annuity withdrawals prior to age 59 1/2 will be subject to a ___% IRS penalty plus __________________ of earnings.

A

Annuity withdrawals prior to age 59 1/2 will be subject to a 10% IRS penalty plus FEDERAL TAXATION of earnings.

46
Q

Withdrawals from an annuity may not take place prior to age _______ without penalty.

A

59 1/2

47
Q

Describe a flexible premium deferred annuity.

A

Flexible payments (subject to monthly minimum), with tax-deferred growth until later withdrawn (e.g., at retirement)

48
Q

What is the purpose of an annuity?

A

To provide an income that the annuitant cannot outlive

49
Q

What account is used for the placement of an insurance company’s variable contract assets?

A

A separate account

50
Q

Which annuity provides a fixed, guaranteed minimum rate of return?

A

A fixed annuity

51
Q

A flexible premium annuity usually requires a _________ monthly contribution.

A

minimum monthly contribution.

52
Q

Interest earned within an annuity grows ______________.

A

tax-deferred.

53
Q

True or False: A flexible premium deferred annuity is designed for future income.

A

True

54
Q

What factors affect the annuity payout amount?

A

Interest rates, contribution amounts, and payout option selected

55
Q

True or False: Joint and last survivor payouts will cease after the first annuitant dies.

A

False.

The joint and last survivor payouts continue payment until the last surviving annuitant dies.

56
Q

If an annuity owner dies during the accumulation phase, what would the beneficiary be entitled to receive?

A

The higher of the total contributions or contract value on the date of death

57
Q

Which type of annuity would most likely be considered a security–fixed or variable?

A

A variable annuity

58
Q

An immediate annuity must begin making income payments within ____ days of the initial deposit.

A

30 days

59
Q

What type of annuity has no accumulation period?

A

A lump-sum or single premium annuity

60
Q

Annuitization is described as the _________________________ of an estate or pool of money.

A

systematic liquidation

61
Q

True or False: An annuity contract uses different mortality tables than a life insurance policy.

A

True

62
Q

Currently, ___________ companies are the only type of company that may sell annuities.

A

insurance

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