CPCU 553 Ch. 10

Question 1

A retirement savings plan by which an individual can use tax deductible and tax deferred methods for accumulating funds

Answer 1

Traditional individual retirement account (IRA)

Question 2

A retirement savings plan by which an individual can accumulate investment income on a tax free basis (subject to certain limitations)

Answer 2

Roth IRA

Question 3

A pension plan that is based on the monthly retirement benefit rather than on the contribution rate

Answer 3

Defined benefit plan

Question 4

A pension plan in which the contribution is a percentage of the participating employee’s earnings or flat dollar amount

Answer 4

Defined contribution plan

Question 5

A type of life insurance policy or contract that makes periodic payments to the recipient for a fixed period or for life in exchange for a specified premium

Answer 5

Annuity

Question 6

An annuity with an accumulation period that usually lasts a number of years

Answer 6

Deferred annuity

Question 7

An annuity contract bought with a single payment and with a specified payment plan that starts right away

Answer 7

Immediate annuity