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Insurance > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

The contribution phase of an annuity is called the ____________ phase.

A

Accumulation

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2
Q

Identify the acronym: SPDA

A

Single Premium Deferred Annuity

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3
Q

What licenses are required for an agent to sell variable annuities or variable life?

A

Both a life insurance license and FINRA Series 6 or 7 license is required

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4
Q

Identify the acronym: SPA

A

Single Premium Annuity

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5
Q

Which annuity payout would have the lower monthly income benefit a 10- or 20-pay with period certain?

A

The 20-pay period certain would have a lower payment since the guarantee is longer

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6
Q

Which type of annuity would most likely be considered a security — fixed or variable?

A

A variable annuity

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7
Q

At annuitization (payout), accumulation units are exchanged for __________ units.

A

Annuity

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8
Q

An annuitant with a straight life annuity dies after 9 years. How many years of benefit will his beneficiary receive?

A

$0. Straight life payments cease in the death of the annuitant.

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9
Q

What benefit does the installment refund option on an annuity certain payout allow the beneficiary?

A

To continue to receive the remainder of the monthly income benefits

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10
Q

What modification is made to the straight life payout option to guarantee payments for a minimum number of years?

A

Attaching a period certain to a payout

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11
Q

An immediate annuity must begin making income payments within ____ days of the initial deposit.

A

30

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12
Q

What is another name for annuity surrender charge?

A

Back end loads

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13
Q

Annuity withdrawals prior to age 59 1/2 will be subject to a _____% IRS penalty plus _______________ of earnings.

A

10%; federal taxation

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14
Q

An annuitant with a 20-year certain annuity dies after 7 years, how many years of benefits will a beneficiary receive?

A

The beneficiary will receive the remaining 13 of the 20 years.

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15
Q

What is the purpose of an annuity?

A

To provide an income that the annuitant cannot outlive

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16
Q

What annuity provides a monthly income that varies depending on market performance?

A

A variable annuity

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17
Q

Interest earned with a deferred annuity grows on a __________ basis.

A

Tax deferred

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18
Q

Describe a flexible premium deferred annuity.

A

Flexible payments (subject to monthly minimum), with tax-deferred growth until later withdrawn

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19
Q

Which annuity provides a fixed, guaranteed minimum rate of return?

A

A fixed annuity

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20
Q

A flexible premium annuity usually requires a __________ monthly contribution.

A

Minimum

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21
Q

What is the annuity nonforfeiture value?

A

The value of an annuity minus any surrender fees

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22
Q

Annuity premiums may be paid as a ___________, or on a __________ basis.

A

Lump sum; periodic

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23
Q

T/F: An annuity contract uses different mortality tables than a life insurance policy.

A

T

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24
Q

The annuity benefit of a woman would be ______ than a man’s because a woman is expected to ___________.

A

Less; live longer

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25
Q

What is the benefit of the Straight-Life payout option to the annuitant?

A

It provides the highest monthly income

26
Q

What account is used for the placement of an insurance company’s variable contract assets?

A

A separate account

27
Q

T/F: A flexible premium deferred annuity is designed for future income.

A

T

28
Q

The cash refund option of an annuity certain payout provides the beneficiary a __________ refund of remaining benefits.

A

Lump sum

29
Q

What type of annuity provides a predetermined income for life?

A

A fixed annuity

30
Q

What type of annuity has no accumulation period?

A

A lump sum or single premium annuity

31
Q

T/F: Joint and last survivor payouts will cease after the first annuitant dies.

A

F; the joint and last survivor payouts continue payment until the last surviving annuitants dies

32
Q

T/F: An annuity with a 20-pay certain annuity payout guarantees at least 20 years of payments will occur.

A

T; at least 20 years of payment are guaranteed to the annuitant, the beneficiary, or both

33
Q

Which annuity provides a guaranteed return — fixed or variable?

A

Fixed annuities

34
Q

An annuity is designed to protect a person against _________ his income.

A

Outliving

35
Q

Inflation risk would be a concern for an owner of a _________ annuity.

A

Fixed

36
Q

What is the risk of the straight life annuity payout option?

A

There is no beneficiary after the annuitants death

37
Q

Traditional contract assets are placed in the insurance company’s __________ account.

A

General

38
Q

Annuitization is described as the _________________ of an estate or pool of money.

A

Systematic liquidation

39
Q

What type of annuity is designed to pay income at a later date?

A

A deferred annuity

40
Q

What annuity’s growth is dependent on the performance of securities in a separate account?

A

A variable annuity

41
Q

Interest earned within an annuity grows ____________.

A

Tax deferred

42
Q

All variable contract assets are placed in the insurance company’s ___________ account.

A

Separate

43
Q

Currently, ___________ companies are the only type of company that may sell annuities.

A

Insurance

44
Q

Withdrawals from an annuity may not take place prior to age ______ without penalty.

A

59 1/2

45
Q

What payout option provides payments for the annuitants whole life, but will cease at death?

A

The straight life payout option

46
Q

A single premium annuity may also be called a __________ annuity.

A

Lump sum

47
Q

Which annuity allows for stock market appreciation with guaranteed downside protection?

A

An equity indexed annuity

48
Q

The ___________ rate is the percentage of the gain kept by an insurer, based on the overall return of an index.

A

Participation

49
Q

If an annuity owner does during the accumulation phase, what would the beneficiary be entitled to receive?

A

The higher of the total contributions or contract value on the date of death

50
Q

T/F: the annuity owner and the annuitant do not need to be the same person.

A

T; the annuity can be purchased for someone other than the owner

51
Q

The payout phase of an annuity may also be referred to as the ___________ phase.

A

Annuity

52
Q

What is another name for a pure life annuity?

A

A straight life or life annuity

53
Q

A client dies soon after annuitization with a straight life payout option. Is there a death benefit to a beneficiary?

A

No. The contract is based on the annuitants life only

54
Q

Which annuity payout option pays the annuitant for life with no survivorship benefit?

A

The straight or pure life annuity payout

55
Q

What factors affect the annuity payout amount?

A

Interest rates, contribution amounts, and payout option selected

56
Q

Which annuity option does not guarantee an income for life, but rather an income for a predetermined number of years?

A

The annuity certain option

57
Q

Who assumes the investment risk in a variable annuity contract?

A

The client or contract owner

58
Q

What annuity payout option pays income to more than one party and stops upon death if any party listed on the contract?

A

The joint life option

59
Q

What is the only method used to fund an immediate annuity?

A

Lump sum contribution

60
Q

What is another name for the annuity accumulation phase?

A

The pay in ohase

61
Q

Periodic annuity payments may be _________ or _________.

A

Level; flexible

62
Q

What is another name for the annuity payout period?

A

The annuity phase

Insurance (10 decks)

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