Annuities

Question 1

The time when a policy owner contributes to an annuity is called the

Answer 1

accumulation period

Question 2

If an insured inherited a large amount of money at age 40 and desired to use it to provide a guaranteed income after retirement at age 65, the annuity would be

Answer 2

Deferred

Question 3

which of the following statements is INCORRECT about fixed annuities?

Answer 3

Their monthly benefit pay out amount can vary

Question 4

An annuity that guarantees a minimum rate of return is called a/an

Answer 4

Fixed annuity

Question 5

Annuities may be purchased with all of the following payment methods EXCEPT

Answer 5

Variable payments

Question 6

An annuity that begins paying one month after it is purchased would be a

Answer 6

Single premium immediate annuity

Question 7

If an annuitant chose a refund life benefit option and dies after the annuity income begins, the beneficiary will receive

Answer 7

A settlement of the remaining funds

Question 8

Which type of annuity settlements stops when the annuitant dies?

Answer 8

Life only

Question 9

An annuity which pays a specified number of years whether the annuitant is alive or dead is known as a

Answer 9

Life annuity with period certain

Question 10

The minimum rate of return an annuity earns in a fixed annuity is determined by the

Answer 10

Guaranteed interest rate

Question 11

Which of the following type of annuities would be best suited for a retired couple who want to have an income for as long as either lives

Answer 11

Joint and survivor annuity

Question 12

In equity indexed annuities, the equity is

Answer 12

tied to an index such as the S&P 500

Question 13

What are the tax consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2

Answer 13

10% penalty and tax on interest earned

Question 14

to discourage early termination of an annuity, what is included in an annuity contract?

Answer 14

Surrender charges

Question 15

In a deferred annuity contract, which of the following statements is TRUE about the annuitant?

Answer 15

Annuity payments are based on the annuitants life expectancy

Question 16

Under a life income annuity, Which factor would NOT influence the benefit payment amount on a single premium deferred annuity?

Answer 16

Annuitants age when the annuity was purchased

Question 17

The annuity benefit payment is based on all of the following EXCEPT the

Answer 17

Premium paid

Question 18

Devon dies during the accumulation phase of his deferred annuity. What will happen to her annuity account

Answer 18

Her beneficiary will receive the amount or the cash value, whichever is greater

Question 19

Which of the following is NOT true of variable annuity contracts

Answer 19

Variable annuity investments are held in the insurer’s general account

Question 20

Before variable annuity benefits can be paid out, the accumulation units must be converted to

Answer 20

Annuity Units