Annuities Flashcards
The period during which a person receives the annuity benefits is called the
- putting in period
- annualization period
- accumulation period
- payout period
annualization period
All of the following statements about annuities benefits vs. life insurance benefits are correct except?
- annuities can be used to liquidate an estate
- annuities protect against dying too soon
- annuities protect against living too long
- annuities use a lump sum of accumulated money to guarantee income payments while living
- annuities protect against dying too soon
All of the following are factors in determining a life annuity payout amount EXCEPT the
- annuitant’s age
- payment guarantee
- annuitant’s gender
- beneficiary’s age
- beneficiary’s age
Under which of the following life annuity payout options do the payments stop when the first of two annuities die and do not continue on the survivor?
- Life only
- Life with period certain
- Joint life
- Joint life and survivor
- Joint life
Fixed period and fixed amount are types of
- life-period certain annuities
- joint-life annuities
- life annuities
- temporary annuities
- temporary annuities
Fixed annuities are supported by insurers
- separate account
- general account
- personal account
- high-risk investment accounts
- general account
Which of the following is NOT a type of annuity product?
- retirement
- fixed
- equity-indexed
- variable
- retirement
Which of the following types of annuities is guaranteed against loss &; not tied directly to the stock market?
- fixed
- equity-indexed annuity
- market value adjusted
- variable
- fixed
A tax-favored retirement savings plan that people can set up themselves through a bank, securities firm, or insurance company is known
- a whole life insurance policy
- an individual retirement account (IRA)
- a term insurance policy
- a savings account
- an individual retirement account (IRA)
All of the following are factors that determine the annuity benefit EXCEPT
- the annuitant’s age
- the annuitant’s tax bracket
- the annuitant’s sex
- the company’s expense (loading) factor
- the annuitant’s tax bracket
Which annuity settlement arrangement guarantees to pay at least a minimum amount equal to the original investment?
- Installment refund annuity
- Period certain annuity
- Pure life annuity
- Joint & full survivor annuity
- Period certain annuity
Which of the following statements does NOT describe a fixed annuity?
- It will produce income benefits that are adjusted to keep pace with inflation
- It is invested in the insurer’s general account
- It provides a guaranteed rate of interest
- It guarantees income payment will last annuitant’s lifetime
- It will produce income benefits that are adjusted to keep pace with inflation
What type of annuity payment option provides a guaranteed income to the annuitant for life and, if the annuitant dies before the annuity is depleted, a lump-sum cash
- Period certain option
- Installment refund
- straight life option
- cash refund option
- cash refund option
Annuities are classified by all of the following except?
- who issues them
- underlying investment (fixed vs. variable)
- funding method (single vs. periodic/flexible/fixed
- payout start (immediate vs. deferred
- who issues them
Matteo has a nonqualified annuity that has a current value of $50,000. He has 2 children, ages 11 & 17. If he decides to devote this annuity solely to help pay for their college education, and his goal is to maximize the annuity income payments, which of the following is the best option?
- Convert to an immediate annuity using a 10-year period certain annuity option
- Convert to an immediate annuity using a 10-year period certain & life annuity income option
- Convert to an immediate annuity with an installment refund annuity income option
- Convert to an immediate annuity using a straight life annuity income option
- Convert to an immediate annuity using a 10-year period certain annuity option
The period during which annuity benefits are received is called
- the accumulation period
- the annualization period
- the payout period
- the earnings period
- the annualization period
An annuity contract owner has the right to do all of the following except
- change the interest rate
- Name or change the annuitant
- surrender or terminate the agreement
- choose the payout option
- change the interest rate
Which of the following statements regarding the tax treatment of distributions from an individually owned, nonqualified, deferred annuity is NOT correct?
- If the distribution is the result of the annuity contract owner’s death, the cash value payable to the beneficiary is income tax-free.
- An owner of a deferred annuity who annuitizes the contract will receive the basis tax-free
- If the contract owner makes a partial surrender, the amount withdrawn is treated first as a taxable distribution of gain (LIFO)
- If the contract owner is younger than age 59 1/2, a partial surrender may be subjected to a 10% penalty in addition to ordinary income
- If the distribution is the result of the annuity contract owner’s death, the cash value payable to the beneficiary is income tax-free.
Which of the following types of annuity payout options guarantees, as a minimum, the payout of the entire annuity principal amount?
- Period certain
- Pure Life
- Cash refund
- Joint & full survivor option
- Cash refund
Who, besides the state of variable life insurance & variable annuities?
- The Federal Trade Commission (FTC)
- The Securities & Exchange Commission (SEC)
- The Federal Communications Commission (FCC)
- The National Association of Insurance Commissioners (NAIC)
- The Securities & Exchange Commission (SEC)
Which of the following would NOT be required of a producer who wants to sell variable annuities?
- Having a valid producer life insurance license & completing the state variable annuity certification, if required
- Registration with the Finacial Industry Regulatory authority
- Successfully passing the required exams
- Registration with the National Association & Financial Advisors
- Registration with the National Association & Financial Advisors
Tony, who is 65 & in excellent health, wants to buy an annuity with $100k he recently gained on the sale of his home. He wants to select an income option that will provide him the highest monthly income possible. Which annuity income option best meets Tony’s objective?
- an installment refund annuity income option
- A straight life annuity income
- it is not possible to answer this question with the limited information provided
- A 10-year period certain & life annuity income option
- A straight life annuity income
Norma & Luis are considering the purchase of an annuity for retirement. Wich payout option would be the least suitable for them?
- The life with the period certain option
- The life with refund option
- The joint-life annuity option
- the joint-life and survivor annuity
- The joint-life annuity option
The owner of an annuity contract possesses all of the following EXCEPT
- to determine the annuity income settlement option even when the annuitant is another person
- to designate the contract’s annuitant & the beneficiary
- to cancel a deferred annuity at any time & receive its full cash
- to advance the deferred annuity’s starting date to an earlier date than that which is stated in the contract at issue
to cancel a deferred annuity at any time & receive its full cash
A principal function of annuities is to
- provide for surviving dependents
- reduce income taxes
- liquidate an estate
- create an estate
- liquidate an estate
Which annuity settlement arrangement guarantees to pay at least a minimum amount equal to the original investment?
- Joint & full survivor annuity
- Installment refund annuity
- Pure life annuity
- Period certain annuity
- Installment refund annuity
which of the following statements does NOT describe a fixed annuity?
- It will produce income benefits that are adjusted to keep pace with inflation
- It guarantees income payments will last the annuitant’s lifetime
- It is invested in the insurer’s general account
- It provides a guaranteed rate of interest
- It will produce income benefits that are adjusted to keep pace with inflation
Premiums paid into a variable annuity, after deduction for expenses, are applied regularly to purchase
- annuity units
- stock units
- variable units
- accumulation units
- accumulation units
