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Insurance > Annuities > Flashcards

Annuities Flashcards

1
Q

Annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is what type?

A

Flexible premium deferred

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2
Q

If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the owner receive?

A

Current

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3
Q

Main reason for purchasing an annuity?

A

To provide income that the annuitant cannot outlive

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4
Q

2 classifications of annuities according to the time when annuity payments begin

A

Immediate and deferred

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5
Q

Who bears the investment risk in a fixed annuity?

A

The insurer

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6
Q

Type of annuity can be purchased with single premium

A

Immediate

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7
Q

Annuity for someone who wants the benefit option that will pay the largest amount only for as long as the annuitant lives?

A

Straight life

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8
Q

Annuity settlement option provides income payments to the annuitant for the duration of his or her life and ceases at the annuitants death?

A

Pure life

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9
Q

In an annuity the accumulated money is converted into a stream of income during which phase?

A

Annuitization period

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10
Q

Licenses you need to sell annuities?

A

Life insurance and securities

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11
Q

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

A

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period, then the payments will last for 15 years

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12
Q

How soon can payments begin in an immediate annuity?

A

No later than 1 year from the time of the annuity purchase

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13
Q

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

A

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

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14
Q

How long is a pure life annuity paid out?

A

Only for the life of the annuitant

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15
Q

Disadvantage of owning a fixed annuity as opposed to variable

A

During inflation, the benefit of a fixed annuity will have decreased purchasing power

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16
Q

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

A

Amount of premium

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17
Q

How are annuities classified depending on how many lives they cover?

A

Single life and multiple life

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18
Q

With a single premium deferred annuity, when will the annuity payments become available?

A

No sooner than one year after the purchase

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19
Q

Diff between single premium and flexible premium payment options in a deferred annuity?

A

The number of payments that purchase the annuity

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20
Q

Can a business or a corporation be an annuitant?

A

No, an annuitant must be a natural person

21
Q

What are the two types of refund life annuities?

A

Cash refund and installment refund

22
Q

What is the diff between annuitant and beneficiary?

A

The beneficiary receives benefits after the annuitants death

23
Q

Settlement option provides income to the annuitant for their life, and also guarantees payment for a specified number of years

A

Life income with period certain

24
Q

Who posses all the rights in an annuity?

A

Annuity owner

25
Q

What are accumulation units in annuities?

A

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

26
Q

Annuity tables are different than mortality tables why

A

Since there is no insurance protection

27
Q

Insurers take $ from people who die quickly and

A

Pay to those who live much longer

28
Q

If an annuitant owner dies before annuitization period, the $ is paid to the beneficiary and they pay taxes on what

A

interest earned

29
Q

Rights of ownership on an annuity become effective when

A

As of the contract date

30
Q

When can you surrender a deferred annuity for cash?

A

during the accumulation period

31
Q

Who is responsible for paying the premium in an annuity

A

The policyowner

32
Q

When a policy owner surrenders the policy for cash they have exercised what

A

Nonforfieture option

33
Q

Surrender charge on an annuity is sometimes called what

A

Back end load

34
Q

Annuities waive surrender charges for what

A

Death and disability

35
Q

Death benefit on an annuity during the accumulation period is equal to what

A

Its cash value

36
Q

If the owner of a life income annuity with 10 year period certain dies after 13 years what does the beneficiary receive?

A

Nothing

37
Q

Does a life income annuity have a beneficiary?

A

No it is the riskiest choice

38
Q

On a joint life annuity when do payments stop?

A

At the death of the first annuitant

39
Q

Annuity with least amount of risk

A

Refund annuity

40
Q

Can you exchange an annuity for life insurance?

A

No but you can for another annuity under sec 1035

41
Q

Fixed annuities are backed by what

A

Insurers general account

42
Q

Fixed annuities

A

Guarantee a fixed return and are backed by the state guaranty association

43
Q

Equity indexed annuity

A

Rate of return based on a index of equity products

44
Q

Do equity indexed annuity’s have much purchasing power risk?

A

No because they’re linked to an index

45
Q

Employers can use annuities to fund a deferred compensation plan

A

But not a corporate pension plan

46
Q

Lottery payouts and structured settlements are usually funded by what

A

Annuities

47
Q

Most immediate annuities are purchased by whom

A

Those who wish to supplement their retirement income

48
Q

When recommending a variable annuity you should inquire about what

A

Applicants tax status

Insurance (17 decks)

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