Annuities

Question 1

If the annuitant dies before the annuity start date,

Answer 1

The premiums paid plus interest earned will be given to the beneficiary

Question 2

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?

Answer 2

Refund annuity

Question 3

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

Answer 3

Guaranteed lifetime withdrawal benefit

Question 4

Which of these annuities require premium payments that vary from year to year?
A) flexible premium immediate annuity
B) flexible premium deferred annuity
C) fixed premium deferred annuity
D) fixed premium immediate annuity

Answer 4

B) flexible premium deferred annuity

Question 5

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

Answer 5

Life annuity

Question 6

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

Answer 6

A minimum of 12 months after date of purchase

Question 7

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

Answer 7

Income period

Question 8

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

Answer 8

It is taxable

Question 9

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

Answer 9

S & P 500

Question 10

How are annuities given favorable tax treatment?

Answer 10

Gains are taxed at distribution

Question 11

Which of the following is an annuity that is linked to a market-related index?
A) market-related annuity
B) equity-indexed annuity
C) deferred-risk annuity
D) fixed-amount annuity

Answer 11

B) equity-indexed annuity

Question 12

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

Answer 12

Life income

Question 13

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?

Answer 13

Temporary annuity certain

Question 14

Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?
A) principal returned is taxable
B) benefits are still payable tax-free to the beneficiary
C) company retains entire cash value
D) premiums paid plus interest earned is returned to the beneficiary

Answer 14

D) premiums paid plus interest earned is returned to the beneficiary

Question 15

How do interest earnings accumulate in a deferred annuity?

Answer 15

On a tax deferred basis