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Basic Principles Of Insurance > Annuities > Flashcards

Annuities Flashcards

1
Q

What is a common reason people purchase an annuity?

A

How to protect against the rest of outliving their financial resources

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2
Q

An annuitant would like to determine the current value of her annuity,
do this, she multiplies the number of “accumulation units” she owns
times the unit value of the “separate account”. What kind of annuity BEST
matches this description?

A

Variable annuity

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3
Q

The taxable portion of each annuity payment is calculated using which
method?

A

Exclusion ratio

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4
Q

Kathy’s annuity is currently experiencing tax-deferred growth until she
retires. Which phase is this annuity in?

A

Accumulation period 

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5
Q

An immediate annuity has been purchased with a single premium. When
does the annuitant typically begin receiving benefit payments?

A

1 month

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6
Q

Who assumes the investment risk with a fixed annuity contract?

A

The insurer

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7
Q

If the annuitant dies before the annuity start date,

A

The premium payments plus interest earned will be given to the beneficiary

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8
Q

Andy the annuitant dies before the annuity start date. Which of the
following is a TRUE statement?

A

Premiums paid plus interest earned is returned to the beneficiary.

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9
Q

What will the beneficiary receive if an annuitant dies during the
accumulation period?

A

The greater of the accumulated cash value or the total premium paid

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10
Q

Which type of annuity stops all payments upon the death of the
annuitant?

A

Life annuity

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11
Q

A savings vehicle designed to first accumulate funds and then
systematically liquidates the funds is called a(n)

A

Deferred annuity

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12
Q

Which of the following is NOT a feature of equity-indexed annuities?

A

Offers a Maximo interest rate that increases annually

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13
Q

Victoria owns a life annuity and elects to receive annuity payments
monthly for the remainder of her life with “ten years certain”. Her annuity
will make payments

A

For a minimum of 120 months and a maximum of remainder of her life

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14
Q

Which of these annuities require premium payments that vary from year
to year?

A

Flexible premium deferred annuity

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15
Q

Which market index is normally associated with an indexed annuity’s rate
of return?

A

S&P 500

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16
Q

Which annuity payout option allows the policyowner to choose a pre-
determined number of benefit payments?

A

Period certain

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17
Q

The systematic liquidation of a sum of money is provided by a(n)

A

Annuity

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18
Q

Which of the following is considered to be the period when the
accumulated value in an annuity is paid out?

A

Annuitization phase

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19
Q

An annuitant is guaranteed to NOT outlive their benefits with a(n)

A

Guaranteed lifetime withdrawal benefit

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20
Q

When does an immediate annuity begin making payments?

A

After the first premium has been paid

21
Q

Lisa has recently bought a fixed annuity. Which of these is considered to
be a disadvantage of owning this type of annuity?

A

Doing periods of inflation, a nuance will experience and decrease in purchasing power of their payments

22
Q

Under a non-qualified annuity, interest is taxed after the

A

Exclusion ratio has been calculated

23
Q

Which of these will have the highest monthly payout upon annuitization?

A

Straight life

24
Q

An annuitant dies during the distribution period. What kind of annuity
will return to a beneficiary the difference between the annuity value and
the income payments already made?

A

Refund annuity

25
Q

An annuity which is backed by a life insurer’s separate account is called

A

Variable annuity

26
Q

What kind of annuity pays income to two annuitants until their deaths?

A

Joint and survivor annuity

27
Q

How soon can the benefit payments begin with a deferred annuity?

A

A minimum of 12 months after date of purchase

28
Q

How do interest earnings accumulate in a deferred annuity?

A

On a tax deferred basis

29
Q

Cindy buys a 10-year certain annuity with an installment refund. After
receiving monthly payments for 5 years, Cindy dies. How many remaining
payments will the insurer make to her beneficiary?

A

60 payments

30
Q

Which of these is NOT considered to be a purpose of an annuity?

A

Annuities are intended to create an estate

31
Q

Maria would like an annuity that provides a guaranteed accumulation or
payout. The type of annuity she is seeking is called

A

Annuity certain

32
Q

Which of these statements regarding the annuitant is CORRECT?

A

An annuity life expectancy determines the annuity payments

33
Q

What happens to interest earned if the annuitant dies before the payout
start date?

A

It is taxable

34
Q

During the accumulation period, who can surrender an annuity?

A

The policy owner

35
Q

Fixed annuities provide each of the following EXCEPT

A

Hedge against inflation

36
Q

What is the primary reason for buying an annuity?

A

Provide future economic security

37
Q

An annuitant would like to determine the amount of an annuity
distribution that is exempt from taxation. What is used to calculate this?

A

Exclusions ratio

38
Q

Kristi purchases an annuity that will pay her husband an income for 15
years, If he dies, this income will become payable to their children for the
remainder of the period. Kristi has what kind of annuity?

A

Temporary annuity certain

39
Q

What is the nonforfeiture value of an annuity before annuitization?

A

All premiums paid, plus interest, mine is any withdrawal and surrender charges

40
Q

Which of the following annuity payout options makes no additional
payments regardless of when the annuitant dies?

A

Life only

41
Q

How are annuities given favorable tax treatment?

A

Gains are taxed at distribution

42
Q

Fixed period settlement options are considered to be a form of a(n)

A

Annuity

43
Q

Which settlement option pays a stated amount to an annuitant, but no
residua) value to a beneficiary?

A

Life income

44
Q

An annuity is primarily used to provide

A

Retirement income

45
Q

Phil is shopping for an annuity that guarantees he CANNOT outlive the
benefits. Which of these benefit options would he choose?

A

Guaranteed lifetime withdrawal benefits

46
Q

What distinguishes a deferred annuity from an immediate annuity?

A

The time at which benefit payments start.

47
Q

Which of the following is an annuity that is linked to a market-related

A

Equity-indexed annuity

48
Q

Which type of annuity guarantees a stated number of income payments,
whether or not the annuitant is still alive to receive them?

A

Life annuity certain

49
Q

Simon has purchased a fixed immediate annuity. His payment amount
will be dependent upon principal, interest, and the contract’s

A

Income period

Basic Principles Of Insurance (11 decks)

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