Chapter 8: Annuities Flashcards
T purchased a $100,000 single premium, straight life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company
does NOT have to make any further payments
Which type of contract liquidates an estate through recurrent payments?
annuity
All the following statements regarding a Tax Sheltered Annuity (TSA) are true except
income derived from the TSA is received income tax-free
The annuity that represents the largest possible monthly payment to an individual annuitant is an
straight life annuity
Which of the following are equity indexed annuities typically invested in?
Corporate bonds
Money Market Accounts
Municipal bonds
**S&P 500
Which of the following is NOT included in an annuity contract?
AD&D rider
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called an
installment refund annuity
The payments on Q’s annuity are no less than $250 quarterly. Which of the following annuities does Q own?
flexible installment differed
Which of these is an element of a single premium annuity?
Lump sum payment
A variable annuity has which of the following characteristics?
underlying equity investments
How does an indexed annuity differ from a fixed annuity?
indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
A(n)______ annuity pays benefits based on units rather than stated dollar amounts?
variable
An individual who purchases a life annuity is given protection against
the risk of living longer than expected
An immediate annuity consists of a:
single premium
T, age 70, withdraws cash from a profit sharing plan and purchases a straight life annuity. What will this transaction provide?
income that cannot be outlived by the owner
