Ch 3

Question 1

Annuity death benefit that is the greater of cash value at death, net premiums, or cash value on some previous date.

Answer 1

Stepped-up

Question 2

Annuity death benefit that pays the greater of cash value or net premiums accumulated at a specific interest rate. 4-6%

Answer 2

Rollup

Question 3

Annuity death benefit that is the greater of cash value at death or net premiums (total premium - withdrawals)

Answer 3

Traditional

Question 4

Annuity payments end at death with no refund of excess purchase price.

Answer 4

Straight life annuity.

Question 5

Annuity with payments guaranteed for a minimum number of years. Remaining payments are made to estate if annuitant dies.

Answer 5

Life annuity certain

Question 6

Annuity where all or part of purchase price is refunded if annuitant dies before the principal sum is liquidated.

Answer 6

Refund annuity

Question 7

Annuity with lifetime which fluctuates depending on the insurers investment performance.

Answer 7

Variable annuity

Question 8

How are distributions of a nonqualified annuity taxed?

Answer 8

LIFO

Question 9

Annuity death benefit with predetermined percentage increase to offset beneficiary’s income tax liability.

Answer 9

Enhanced earning benefit.

Question 10

How does tax treatment of life insurance differ from that it an annuity?

Answer 10

Life insurance is tax free; annuities are taxed

Question 11

Does an annuity have mortality charges?

Answer 11

No

Question 12

In a variable annuity, what are mortality and expense charges applied to?

Answer 12

The variable subaccount