ANNUITIES Flashcards
What payout option provides payments for annuitant’s whole life, but will cease at death?
the straight-life payout option
what annuity’s growth is dependent on the performance of securities in a separate account?
a variable annuity
T or F: an annuity contract uses different mortality tables than a life insurance policy
true
what is another name for the annuity accumulation phase?
the pay-in phase
traditional contract assets are placed in the insurance company’s _____ account
company’s general account
the ____ rate is the percentage of the gain kept by an insurer, based on the overall return of an index.
the participation rate
T or F: A flexible premium deferred annuity is designed for future income.
true
what is the risk of the straight-life annuity payout option?
there is no beneficiary payout after the annuitant’s death
annuity withdrawals prior to age 59 1/2 will be subject to a ___ % IRS penalty plus ____ of earnings.
10% IRS penalty plus federal taxation of earnings.
what annuity provides a monthly income the varies depending on market performance?
a variable annuity
what is another name for the annuity payout period?
the annuity phase
what type of annuity has no accumulation period?
a lump-sum or single premium annuity
the annuity benefit of a woman would be ____ than a man’s because a woman is expected to _____
the annuity benefit of a woman would be less than a man’s because a woman is expected to liver longer.
interest earned with a deferred annuity grows on a ___ basis
tax-deferred basis
annuity premiums may be paid as a _____, or on a ___ basis
lump sum, or on a periodic basis
which annuity payout option pays the annuitant for life with no survivorship benefit?
the straight or pure life annuity payout
what benefit does the installment refund option on an annuity certain payout allow the beneficiary
to continue to receive the remainder for the monthly income benefits
identify the acronym: SPA
single premium annuity
T or F: joint and last survivor payouts will cease after the first annuitant dies.
False. The joint and last survivor payouts continue payment until the last surviving annuitant dies.
which annuity option does not guarantee an income for life, but rather an income for a predetermined number of years?
the annuity certain option
describe a flexible premium deferred annuity
flexible payments (subject to monthly minimum), with tax-deferred growth until later withdrawn (e.g. at retirement)
periodic annuity payments may be _____ or _____
level for flexible
what type of annuity is designed to pay income at a later date?
deferred annuity
an annuitant with a straight-life annuity dies after 9 years. How many years of benefit will his beneficiary receive?
$0. straight-life payments cease on the death of the annuitant.
which annuity provides a guaranteed return–fixed or variable?
fixed annuities
what factors affect the annuity payout amount?
interest rates, contribution amounts, and payout option selected
annuitization is described as the ____ of an estate or pool of money
systematic liquidation
which annuity allows for stock market appreciation with guaranteed downside protection?
an equity-indexed annuity
a single premium annuity may also be called a ____ annuity
lump-sum annuity
the cash refund option of an annuity certain payouts provides the beneficiary a ___ refund of remaining benefits
lump-sum
what annuity payout option pays income to more than one party and stops upon death of any party listed on the contract?
the joint life option
all variable contract assets are placed in the insurance company’s _____ account
company’s separate account
a client dies soon after annuitizing with a straight-life payout option. is there a death benefit to a beneficiary?
no, the contract is based on the annuitant’s life only
an immediate annuity must begin making income payments within ___ days of the initial deposit.
30 days
the contribution phase of an annuity is called the ____ period.
accumulation period
an annuity is designed to protect a person against ___ his income.
outliving
currently, ____ companies are the only type of company that may sell annuities
insurance companies
T or F: the annuity owner and the annuitant do not need to be the same person
True, an annuity can be purchased for someone other than the owner
a flexible premium annuity usually requires a ___ monthly contribution
minimum monthly contribution
at annuitization (payout), accumulation units are exchanged for ___ unitys
annuity units
T or F: an annuity with a 30-pay certain annuity payout guarantees at least 20 years of payments will occur.
True, at least 20 years of payment are guaranteed to the annuitant, the beneficiary, or both
which annuity provides a fixed, guaranteed minimum rate of return?
a fixed annuity
withdrawls from an annuity may not take place prior to age ___ without penalty
59 1/2
the ____ rate is the percentage of the gain by an insurer, based on the overall return of an index?
participation rate
an annuitant with a 20 - year certain annuity dies after 7 years, how many years of benefits will a beneficiary receive?
the beneficiary will receive the remaining 13 of the 20 years
T or F: the annuity owner and the annuitant do not need to be the same person
true, an annuity can be purchased for someone other than the owner
