Annuities

Question 1

Deferred

Answer 1

Withheld or postponed until a specified time or event in the future

Question 2

Life contingency

Answer 2

Dependent upon whether or not the insured is alive

Question 3

Liquidation of an estate

Answer 3

Converting a person’s net worth into cash flow

Question 4

Natural person

Answer 4

Human being

Question 5

Qualified plan

Answer 5

A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.

Question 6

Suitability

Answer 6

A requirement to determine if an insurance product or an investment is appropriate for a particular customer

Question 7

How do annuities differ from life insurance policies?

Answer 7

Aunnities liquid (put money in) to an estate

Life insurance policies create an estate

Question 8

What is the difference between mortality tables for annuities vs life insurance?

Answer 8

Annuities use the table to reflect a longer life expectancy and life insurance policy use them to reflect shorter life expectancy.

Question 9

The person who purchases the annuity contract and has all the rights such as naming the beneficiary and surrendering the annuity

Answer 9

Owner

Question 10

The person who receives benefits or payments from the annuity, whose life is taken into consideration and for whom the annuity is written.

Answer 10

Annuitant

Question 11

The person who receives annuity assets (either the amount paid into the annuity or the cash value, whichever, is greater) if the annuitant dies duri g the accumulation period, or to whom the balance of annuity benefits is paid out.

Answer 11

Beneficiary

Question 12

AKA: pay-in period
Is the period of time where a person makes payments or premium into the annuity.

Answer 12

Accumulation Period

Question 13

AKA: Annuitization Period, Liquidation period or pay-out

The time during which the sim that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant.

Answer 13

Annuity period

Question 14

Accumulation Period

Answer 14

Funds are paid INTO the annuity

Question 15

Annuity Period

Answer 15

Funds are paid OUT to the annuitant

Question 16

Shorter life expectancy =_________; Longer life expectancy = __________.

Answer 16

Higher benefit; lower benefit

Question 17

The annuitant must be a:

Answer 17

Natural person

Question 18

If an annuitant dies during the accumulation period, the insurer is obligated to return to the beneficiary either:

Answer 18

The cash value or the total premiums paid; whichever is greater.

Question 19

If the beneficiary is not named, the death benefit will be paid to the:

Answer 19

Annuitant’s estate

Question 20

Classification of annuities

Answer 20

1. Premium payment method: single premium vs periodic
2. When income payments begin: immediate vs deferred
3. How premiums are invested: fixed vs variable
4. Disposing of proceeds: pure life, annuity certain or life refund annuity

Question 21

Fixed annuities are deposited in the company’s

Answer 21

General account

Question 22

Fixed annuities provides

Answer 22

Guaranteed minimum rate of interest to be credited to the purchase payments

Question 23

In fixed annuities, the insurer bears the:

Answer 23

Investment risk.

Question 24

Fixed annuities that invest on a relatively aggressive basis to aim for higher returns.

Answer 24

Index (equity indexed) annuities

Question 25

A single premium deferred annuity that allows the owner to lock in a guaranteed interest rate over a specified maturity period, anywhere between 3 to 10 years. AKA: modified guaranteed annuity (MGA)

Answer 25

Market Value or Market Value Adjusted (MVA)

Question 26

An immediate annuity is purchased with a :

Answer 26

Single premium

Question 27

Income payments from a deferred annuity begin sometime after :

Answer 27

1 year from the date of purchase

Question 28

At surrender, the owner gets the premium, plus interest (the value of the annuity),

Answer 28

Minus the surrender charge

Question 29

Provides the highest monthly benefit, but there is no guarantee that the entire principal will be paid out. AKA: life-only or straight life

Answer 29

Pure life annuity

Question 30

Under this settlement option, if the annuitant dies b4 the principal amount has been paid out, the remainder if the principal amount will be refunded to the beneficiary. AKA: Refund life

Answer 30

Life with Guaranteed Minimum

Question 31

2 types of Refund life annuities

Answer 31

Cash Value Installment Refund

Question 32

When the annuitant dies, the beneficiary receives a lump-sum refund of the principal minus the benefit payments already made to the annuitant.

Answer 32

Cash Value

Question 33

When the annuitant dies, the beneficiary will continue to receive guaranteed installments until the entire principal has been paid out.

Answer 33

Installment Refund

Question 34

Life Contingency payout option where tha annuity payments are guaranteed for the lifetime of the annuitant, and for a specified time for the beneficiary.

Answer 34

Life with period certain

Question 35

Covers one life and annuities payments are made with reference to only one life.

Answer 35

Single life annuities

Question 36

Covers two or more lives.

Answer 36

Multiple life annuities

Question 37

Payout arrangements where two or more annuitants recieve payments until the first death among the annuitants, and then payments stop.

Answer 37

Joint life

Question 38

Guarantees an I come for two recipients that neither can outlive.

Answer 38

Joint and survivor

Question 39

Are short term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated.

Answer 39

Annuities certain

Question 40

Pays for a specific time only, whether or not the annuitant is living. The annuitant selects the time frame and the insurer selects the amount paid.

Answer 40

Fixed period installment option

Question 41

This option pays a specific amount until the funds are exhausted, whether or not the annuitant is living. Annuitant selects amount and insurer selects time frame based on value of account and future earnings.

Answer 41

Fixed-amount installments option

Question 42

The main use of annuities is to provide:

Answer 42

Retirement income

Question 43

Option where the annuitant can withdraw a maximum percentage of his/her investment annually until the initial investment has been recovered. Protects the annuitant against investment losses.

Answer 43

Guaranteed Minimum Withdrawal Benefit (GMWB)

Question 44

Annuities can also be used to accumulate funds for _________ _____.

Answer 44

COLLEGE EDUCATION

Question 45

What can provide savings on a tax-deferred basis for education expenses of the annuitant?

Answer 45

An annuity