Annuities Flashcards
Which annuity payout option allows the policy owner to choose predetermined number of benefit payments? Period Certain. Straight life installment refund. Amount certain.
Period Certain.
Which of these annuities require premium payments to vary from year to year? Flexible, premium immediate annuity flexible premium deferred annuity, premium deferred annuity fix premium immediate annuity.
Flexible, premium deferred annuity
An annuity is primarily used to provide
Retirement income
If the annuitant dies before the annuities start date
The premiums paid + interest earned will be given to the beneficiary
What would the beneficiary receive even an annuitant dies during the accumulation period?
The insurer is obligated to return all a portion of the annuities value of the contract owner dies. The value will be equal to the amount of any contributions minus withdrawal or other expenses plus interest policy. Owner is required to name a beneficiary and title to proceed if they die during accumulation.
What will it beneficiary received via New intent dies during the accumulation period?
The greater of the accumulated cash value or the total premium paid 
Fixed annuities, provide each of the following except… guaranteed interest, retirement, funds, hedge against inflation and tax advantage little little bit
Fix annuities do not provide a hedge against inflation
Which market index is normally associated within an index annuity rate of return NAIC, SEC, S & P 500, A & P 300
S&P 500; an indexed annuity rate of return is linked to a mark index like the S&P 500
How soon can the benefit payment begin with the deferred annuity? Anytime after date of purchase anytime within the 12 months after DOP a minimum of six months after DOP a minimum of 12 months after DOP.
A minimum of 12 months after date of purchase again, bro
Immediate annuities
Purchased with a single lump sum payment can start providing income payments within the first year starting 30 days from purchase date provide liquidation of a principal
Immediate annuity / single premium immediate annuity SPIA
Use the structure payment of liability insurance settlements lottery winnings or other large sons
Deferred annuities
Flexible, premium deferred annuity FPDA / single premium preferred annuity SPDA / fixed deferred annuity
Deferred annuities
Will start providing income payments after the first year
Annuities deferred
can be purchased with a single lump sum payment SPDA single premium deferred annuity
Deferred annuity
With monthly payments, flexible premium, and deferred annuity FPDA
Deferred annuity
Fixed deferred annuity pays out a fixed amount for life starting at a future date; interest credited to the cash values of annuities is deferred until distribution
Deferred annuity cancellation
During the early contract years, insure can assess a back and load surrender charge
Bail out
Single premium deferred annuity. Contracts wave surrender charges, if interest rate falls below a stated level.
Terminated deferred annuity contract
To obtain surrender value, the insurer must first obtain authorization from owner
Terminated deferred annuity contract
To obtain surrender value, the insurer must first obtain authorization from owner
Accumulation value of a deferred annuity
Equal to the sum of premium paid plus interest earned minus expenses and withdrawals
Which is the primary reason for buying an annuity? Tax-free income, risky, yet high return investment, instant estate, future economic security.
Future economic security
Which type of annuity guarantees a stated number of income payments in regardless of the annuitant being alive? Life, annuity, certain, secure, life, annuity, irrevocable, survivor Toyota annuity, guaranteed life annuity.
Life annuity certain 
Which annuity provides guaranteed accumulation or payout? Variable payout, fix accumulation, interest, guaranteed, annuity certain.
Annuity certain
During the accumulation. Who can surrender an annuity? Payor, annuitant, beneficiary, policy owner
Policy owner
An annuity currently experiencing tax deferred growth is in which phase? Payout, Accumulation, deferred growth.
Accumulation
Which annuity payout option allows the policy owner to choose a predetermined number of benefit payments?
Period Certain.
Period Certain.
An annuity where the policy owner chooses a predetermined number of benefit payments
Which is not considered to be a purpose of an annuity? To create an estate, to liquidate an estate, for tax free growth of principle, to distribute accumulated principle.
Annuities are not intended to create an estate
What is the primary use of an annuity? Retirement, income, disability, income, long-term care, benefits, death, benefits.
Retirement income
What is the primary use of an annuity? Retirement, income, disability, income, long-term care, benefits, death, benefits.
Retirement income
Refund annuity
If an annuitant dies during the distribution. The return annuity would give the beneficiary the difference between the annuity value and the income payments made.
If an annuity dies before the annuities start date…. benefits will be given tax free only to a state beneficiary, nothing is given to the beneficiary, Premiums paid will be given to the beneficiary, premiums paid plus interest earned will be given to the beneficiary
Premium paid plus interest earned will be given to the beneficiary
Which annuity requires premium payments that vary from year to year?
Flexible, premium deferred annuity
Which annuity requires premium payments that vary from year to year?
Flexible, premium deferred annuity
Fixed period settlement options are considered
An annuity
Annuitization phase
The period when the accumulated value in an annuity is paid out
Life income
Settlement option that pays a stated amount to an annuity, but provides no residual value to a beneficiary or anyone else
Life income
Also known as straight life income payout option
Straight life, income payout option
Offers protection against exhaustion of savings due to longevity
Which of these statements regarding the annuitant is correct? The contract can only be assigned by an annuitant. Annuitant is the only individual who can surrender the contract. The annuitant must also be the beneficiary. The annuitants life expectancy determines the annuity payments.
The annuitants life expectancy determines the annuity payments. Annuity payments are based on the annuities life expectancy.
Fixed immediate annuity payments
Are dependent upon principal, interest in contract’s income period
Temporary annuity certain
Guarantees payments will be made for a specific number of years if the annuity dies before receiving all payments the beneficiary assigned will receive the payments for the remaining number of years
Who assumes the investment risk with a fixed annuity contract?
The insurer
Nonqualified annuities are taxes after
Exclusion ratio has been calculated
How are annuities given favorable tax treatment?
Gains or tax at distribution
Exclusion ratio
Formula used to determine the annual annuity income exempt from federal income taxes
Exclusion ratio
Formula used to determine the annual annuity income exempt from federal income taxes
Exclusion ratio
The total investment in the contract divided by the expected return
Cost basis
Owners investment in the contract; the amount of money that has been paid into the annuity via premium
Cost basis
Owners investment in the contract; the amount of money that has been paid into the annuity via premium
Annual guaranteed benefit
What the annuitant receives multiplied by the number of years of the annual life expectancy
Exclusion ratio
Cost basis equals premium paid equals total investment of contract divided by expected return, which is the annual guaranteed benefit received by the annuitant multiplied by the number of years of life expectancy, resulting in a ratio applied to benefit payments, providing the exclusion of percentage from income tax
Earned interest
Is taxable if annuitant dies before payout
Immediate annuity
Begin making payments after the 1st premium was paid
Guaranteed lifetime withdrawal benefit GLWB
Rider on a variable annuity allowing minimum withdrawals from invested amount without requiring annuitization. Guarantees amount against invested amount withdrawals for duration of life
Customer would like an annuity that provides a guaranteed accumulation or payout the type of annuity they’re seeking is called
Annuity certain a type of annuity that provides a guarantee of accumulation or payout; Income installments for fixed period as decided by the owner dies prior to the end of the period then the designated beneficiary would receive it for the remainder of the specific period
Which of the following annuity payout options make no additional payments regardless of when the annuitant dies
Life only the life only annuity pay out option has no additional payouts regardless of when the annuitant dies
If annuitant dies before the annuity start date, which of the following would occur
Premiums paid plus interest earned is returned to the beneficiary
Which of these is considered to be a disadvantage of owning a fixed annuity?
During periods of inflation and New will experience the decrease in purchasing power of their payments
How do interest earning accumulate in a deferred annuity?
On a tax deferred basis
What is the non-forfeiture value of an annuity before annuitization?
All premiums paid plus interest minus any withdrawals and surrender charges 
