Section 8 - Annuities Flashcards
Fixed period settlement options are considered to be a form of a(n)
A. Cash Value loan
B. Variable life policy
C. Annuity
D. Endowment
Annuity
Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments?
A. Period certain
B. Straight life
C. Installment refund
D. Amount certain
Period certain
Which of these statements regarding the annuitant is CORRECT?
A. The contract can only be assigned by the annuitant
B. The annuitant is the only individual who can surrender the contract
C. The annuitant must also be the beneficiary
D. The annuitant’s life expectancy determines the annuity payments
The annuitants life expectancy determines the annuity payments
Under a non-qualified annuity, interest is taxed after the
A. Deposits have been made
B. Death of the annuitant
C. Distribution of payments
D. Exclusion ratio had been calculated
Exclusion ratio has been calculated
How do interest earnings accumulate in a deferred annuity?
A. On a tax credit basis
B. On a tax-deferred basis
C. On a tax-free basis
D. On a taxable basis
On a tax deferred basis
Which of these is NOT considered to be a purpose of an annuity?
A. Annuities are intended to created an estate
B. Annuities are intended to liquidate an estate
C. Annuities are intended for the tax-free growth of principle
D. Annuities are intended to distribute accumulated principal
Annuities are intended to create an estate
Which type of annuity stops all payments upon the death of annuitant?
A. Life annuity
B. Period certain annuity
C. Cash refund annuity
D. Joint and survivor annuity
Life annuity
What happens to interest earned if the annuitant dies before the payout start date?
A. It is taxable
B. It is taxable only if no beneficiary is named
C. It is not taxable
D. It is only taxable if contract has been in force under one year
It is taxable
Fixed annuities provide each of the following EXCEPT
A. Guaranteed interest
B. Retirement funds
C. Hedge against inflation
D. Tax advantage
Hedge against inflation
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principle, interest, and the contract’s
A. Surrender charge
B. Death benefit
C. Cash refund
D. Income period
Income period
How soon can the benefit payments begin with a deferred annuity?
A. Anytime after date of purchase
B. Anytime within 12 months after date of purchase
C. A minimum of 6 months after date of purchase
D. A minimum of 12 months after date of purchase
A minimum of 12 months after date of purchase
How are annuities give favorable tax treatment?
A. Gains are tax deductible
B. Gains are tax exempt at distribution
C. Gains are taxed at distribution
D. Gains are converted to tax credits
Gains are taxed at distribution
If the annuitant dies before the annuity start date,
A. The benefits will be given tax-free only to a stated beneficiary
B. Nothing is given to the beneficiary
C. The premiums paid will be given to the beneficiary
D. The premiums paid plus interest earned will be given to the beneficiary
The premiums paid plus interest earned will be given to the beneficiary
Which market index is normally associated with an indeed annuity’s rate of return?
A. NAIC
B. SEC
C. S&P 500
D. A & P 300
S&P 500
What is the nonforfeiture value of an annuity before annuitization?
A. All premiums paid
B. All premiums paid plus interest
C. All premiums paid minus any withdrawals and surrender charges
D. All premiums paid, plus interest, minus any withdrawals and surrender charges
All premiums paid plus interest minus any withdrawals and surrender charges
