Annuities Chapter 6

Question 1

Annuitization

Answer 1

Turning funds into future payments

Question 2

Who is the annuitant?

Answer 2

The person whoses life the annuity payments are based on

Question 3

What is the accumulation period?

Answer 3

The time when premiums are paid into the annuity

Question 4

What is the annuity period?

Answer 4

It is the payout or distribution period.

Question 5

What is annuitization?

Answer 5

The payout or annuity period

Question 6

Are annuity cash values tax deferred?

Answer 6

Yes interest earning and growth are not taxable while they are while they accumulate

Question 7

What are the 3 parties to an annuity?

Answer 7

The owner, annuitant, and the beneficiary

Question 8

Who is the annuity owner?

Answer 8

The person who buys the contract

Question 9

Who is the annuitant?

Answer 9

The person whose life the annuitant payment amount and duration is based on

Question 10

Can the annuitant be a corporation?

Answer 10

No the annuitant must be a person

Question 11

What is an immediate annuity?

Answer 11

An annuity purchase with a single sum of money to begin immediate payments

Question 12

What is a deferred annuity?

Answer 12

It is a contract where annuitization is deferred until a future date

Question 13

What is a single premium preferred annuity question?

Answer 13

An annuity purchased with one lump sum for future distribution

Question 14

What is a flexible premium deferred annuity?

Answer 14

Premium payments can be made in any amount any frequency

Question 15

Are a deferred annuity values nonforfitable?

Answer 15

Yes, Deferred annuity funds always belong to the owner they are not forfeitable even if the owner stops making payments

Question 16

Can an annuity income payment option be changed or stopped?

Answer 16

No

Question 17

What is the life contingency option for an annuity?

Answer 17

The payments last as long as the individual tint lives

Question 18

Under straight life how long are payments made?

Answer 18

Payments are made for the individuals lifetime no matter how long it is?

No payments are made to anyone after the annuitant dies

Question 19

Who received payments on a straight life policy once the annuitant dies?

Answer 19

No one the The contract ends

Question 20

How long are payments under the life income with guaranteed minimum?

Answer 20

Pays the annuitant income for life no matter how long here she lives

Question 21

How long are payments made under the joint and survivor life income option?

Answer 21

payble until the last survivor dies.

Question 22

How long is the joint life annuity option payable ?

Answer 22

It is payable to 2 or more annuitants until the 1st one dies. Then no further payments

Question 23

How do annuity certain options pay?

Answer 23

Is a pay for specified period. Once paid out, payments end even if the person still alive

Question 24

What is a fixed period payout option?

Answer 24

All of the money is paid out for a fixed period of time. 10, 15, 20 yrs… remainder to beneficiary.

Question 25

What is the Fixed Amount Payout Options?

Answer 25

Fixed about payable til all money paid out to beneficiary.

Question 26

What is a fixed annuity?

Answer 26

Contract that guarantees both principle and specified rate of interest
No risk but may not keep up with inflation

Question 27

What is fixed annuity accumulation ?

Answer 27

Can be immediate or deferred. Can be funded either with fixed premiums or flexible premiums

Question 28

What account are premiums for fixed annuities deposited into?

Answer 28

The insurers general account

Question 29

What are the 2 rates a fixed annuity typically has?

Answer 29

A guaranteed rate and a current rate

Question 29

What are the 2 rates a fixed annuity typically has?

Answer 29

A guaranteed rate and a current rate

Question 30

What is annuitized?

Answer 30

Paid out

Question 31

What happens with a fixed annuity annuitization?

Answer 31

Funds are converted into a fixed periodic payment and distributed based on the payout option

Question 32

Are variable annuities guaranteed?

Answer 32

No principal or interest rate guarantee. Funds go into insurers separate account

Question 33

Who regulates producers who sell variable annuities ?

Answer 33

FINRA Financial industry regulatory authority

SEC regulates securities

Question 34

Who regulates variable annuity funds?

Answer 34

The securities exchange commission (SEC)

Question 35

What are equity indexed annuities?

Answer 35

Equity indexed annuities or fixed indexed annuities are tied to the performance of the stock market

Question 36

When a producer delivers an annual contract what must also be delivered?

Answer 36

The byer’s guide

Question 37

Are incompayments made for manuity tax deferred?

Answer 37

Only the cash value accumulates tax deferred. Interest is taxable