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Life Exam > Annuities > Flashcards

Annuities Flashcards

1
Q

An ________ protects individuals against outliving their money.

A

Annuity

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2
Q

______________ indicate the number of individuals within a specified group (ie. Male, female, smoker, non) starting at a certain age who are expected to be alive day a succeeding age.

A

Mortality tables

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3
Q

The person who receives benefits or payments from an annuity.

A

Annuitant

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4
Q

Annuities are based off the life expectancy of whom.

A

The annuitant

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5
Q

The annuitant must be a _____________, regardless of who owns the policy.

A

Natural person

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6
Q

The purchaser of the annuity contract but not necessarily the one who receives benefits. May be a Corp, trust, or other legal entity.

A

Owner

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7
Q

Know as the pay in period. Period of time owner makes tax deferred payments (premiums) into an annuity.

A

Accumulation period

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8
Q

Time in which the sun accumulated is converted to a stream of income payments to annuitant.

A

Annuity period (also known as annuitization period, liquidation period, or pay-out period)

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9
Q

The time when the annuity benefit payouts begin.

A

Annuatization date

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10
Q

Shorter life expectancy = _______ benefit

Longer life expectancy = _________ benefit

A

Higher; lower

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11
Q

If an annuitant dies during the accumulation period, the insurer is obligated to return to the __________ either the cash value or total premiums paid.

A

Beneficiary

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12
Q

The two premium payment methods for annuities.

A

Single premium vs periodic

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13
Q

The two classifications of how annuity premiums are invested.

A

Fixed vs. variable

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14
Q

The three classifications for the disposing of annuity proceeds. (Pal)

A

Pure life, annuity certain, life refund annuity

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15
Q

An ________ annuity is purchased with a single premium.

A

Immediate

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16
Q

The income payments from a deferred annuity begin sometime after _________ from the date of purchase.

A

1 year

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17
Q

Stipulates that a deferred annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitizarion.

A

Nonforfeiture law

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18
Q

Helps compensate the company for loss of investment value due to an early surrender of a deferred annuity.

A

Surrender charges

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19
Q

At surrender the owner gets the ______ + __________, minus the surrender charge.

A

Premium + interest

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20
Q

Annuity contracts provide for a waiver of surrender charges if the annuitant is _____________ for at least 30 days.

A

Long term care

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21
Q

Allows one to surrender contract without charge in the event interest rates drop to a specified amount within a specified time frame.

A

Bail out provision

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22
Q
  • guaranteed minimum rate of interest
  • income payments do not vary
  • guaranteed dollar amount and length of period of payment determined by the settlement option chowed. Y annuitant
A

Fixed annutiies

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23
Q

In __________ annuities the premiums are deposited into the insurance company’s general account

A

Fixed

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24
Q

annuity that is invested on a more aggressive basis and is tied to stock investment rates.

A

Indexed annuities

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25
Q

During accumulation the insurer will give the annuitant a guaranteed interest rate based on a ________ rate as specified, or the __________ interest rate, whichever is higher.

A

Minimum, current

26
Q

Annuity that:
- separate account
- no guarantees interest rate
- a security; securities license required

A

Variable annuity

27
Q

Variable premiums purchase ___________ units, which is similar to buying shares ina. Mutual fund.

A

Accumulation

28
Q

Provides higher monthly benefit but ceases upon death.

A

Pure life

29
Q

Pays a specific amount for remainder of life; remainder of principal at death goes to beneficiary.

A

Life with guaranteed minimum

30
Q

Provides the highest monthly benefit but no guarantee that the entire principal will be paid out.

A

Pure life annuity

31
Q

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

A

Cash refund

32
Q

Cash refund does or does not guarantee to pay any interest?

A

Does not

33
Q

When annuitant dies the beneficiary continues to receive guaranteed installments until the entire principal amount has been paid out

A

Installment refund

34
Q

Any unpaid annuity benefits following the death of an annuitant are or are not taxable to the beneficiary?

A

Are

35
Q

Annuity payments are guaranteed for the life of the annuitant and for a specified time for the beneficiary.

A

Life with period certain

36
Q

Cover one life and annuity payments are made with reference to one life only.

A

Single life

37
Q

Cover 2 or more lives

A

Multiple life

38
Q

A payout arrangement where 2 or more annuitants receive payments until the first death among them then payments stop.

A

Joint life

39
Q

Life income option that guarantees income for two recipients for life. Usually a lower payout after first death. No guarantee that all proceeds will be paid out of both beneficiaries die shortly after installments begin.

A

Joint and survivor

40
Q

Short term annuities that limit the amounts paid to a certain fixed period

A

Annuities certain

41
Q

Pays for a specified time only, whether or not the annuitant is living

A

Fixed period

42
Q

Annuitant selects amount for each payment, insurance company determines how long. Pays until funds are exhausted or upon death remaining funds go to beneficiary

A

Fixed amount

43
Q

The main use of annuities is to provide for what?

A

Retirement incime

44
Q

Option for the annuitant to withdraw max percentages of their investment annually until the initial investment has been em recovered.

A

Guaranteed minimum withdrawal benefit (gmwb)

45
Q

With a lump sum settlement all interest accumulated is _________. Additional __% penalty can be imposed prior to annuitants reaching age ____

A

Taxable; 10%; 59 1/2

46
Q

How long will a life annuity with a 15-year period certain pay?

A

For the life of the annuitant unless they die within the first 15 years of the annuitizarion period; then the payments will last for 15 years.

47
Q

What type of annuity is suitable for someone who wants to select the benefit option thay will pay the largest amount only as long as the annuitant lives?

A

Straight life

48
Q

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

A

Either the amount paid into the annuitu or the cash value, whichever is greater.

49
Q

How long is income paid under a pure life annuity?

A

Only for the life of the annuitant

50
Q

In flexible premium payment annuities, the term flexible refers to what?

A

Amount of premium

51
Q

What are accumulation units in annuities?

A

Ownership interest in the separate account (instead of buying shares, annuity holder purchases accumulation units)

52
Q

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?

A

Life income with period certain

53
Q

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and ceases at the annuitant’s death?

A

Pure life

54
Q

What happens if a deferred annuity is surrendered before the annuatization period?

A

The owner will receive the surrender value of the annuity.

55
Q

Who can surrender a deferred annuity contract?

A

Only the annuity owner

56
Q

T/F: death benefits are findable by annuities.

A

False

57
Q

T/F: estate liquidation is not fundable by annuities.

A

False

58
Q

Creating an estate is or is not an appropriate use of a deferred annuity.

A

Is NOT. Unlike life insurance they liquidate it. Not create it

59
Q

Annuities are taxed as income, NOT ________________

A

Capital gains

60
Q

Exceptions to the 59 1/2 rule.

A

Total disability
Catastrauphic medical expenses
Down payment on FURST home up to 10k
Post secondary education.

61
Q

Even though the death benefit in a life policy is paid to the beneficiary tax free it may be included in the taxable estate at death in what situations?

A
  1. Incidents of ownership -
  2. Estate as beneficiary
  3. Transfer of ownership within 3 years of death
62
Q

Annuitant must be a _______, owner can be a _______

A

Natural person, corp

Life Exam (9 decks)

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