Annuities

Question 1

Annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is what type?

Answer 1

Flexible premium deferred

Question 2

If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the owner receive?

Answer 2

Current

Question 3

Main reason for purchasing an annuity?

Answer 3

To provide income that the annuitant cannot outlive

Question 4

2 classifications of annuities according to the time when annuity payments begin

Answer 4

Immediate and deferred

Question 5

Who bears the investment risk in a fixed annuity?

Answer 5

The insurer

Question 6

Type of annuity can be purchased with single premium

Answer 6

Immediate

Question 7

Annuity for someone who wants the benefit option that will pay the largest amount only for as long as the annuitant lives?

Answer 7

Straight life

Question 8

Annuity settlement option provides income payments to the annuitant for the duration of his or her life and ceases at the annuitants death?

Answer 8

Pure life

Question 9

In an annuity the accumulated money is converted into a stream of income during which phase?

Answer 9

Annuitization period

Question 10

Licenses you need to sell annuities?

Answer 10

Life insurance and securities

Question 11

How long will a life annuity with a 15 year period certain pay?

Answer 11

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period, then the payments will last for 15 years

Question 12

How soon can payments begin in an immediate annuity?

Answer 12

No later than 1 year from the time of the annuity purchase

Question 13

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Answer 13

Either the amount paid into the annuity or the cash value, whichever is greater

Question 14

How long is a pure life annuity paid out?

Answer 14

Only for the life of the annuitant

Question 15

Disadvantage of owning a fixed annuity as opposed to variable

Answer 15

During inflation, the benefit of a fixed annuity will have decreased purchasing power

Question 16

In flexible premium payment annuities, the term flexible refers to what?

Answer 16

Amount of premium

Question 17

How are annuities classified depending on how many lives they cover?

Answer 17

Single life and multiple life

Question 18

With a single premium deferred annuity, when will the annuity payments become available?

Answer 18

No sooner than one year after the purchase

Question 19

Diff between single premium and flexible premium payment options in a deferred annuity?

Answer 19

The number of payments that purchase the annuity

Question 20

Can a business or a corporation be an annuitant?

Answer 20

No, an annuitant must be a natural person

Question 21

What are the two types of refund life annuities?

Answer 21

Cash refund and installment refund

Question 22

What is the diff between annuitant and beneficiary?

Answer 22

The beneficiary receives benefits after the annuitants death

Question 23

Settlement option provides income to the annuitant for their life, and also guarantees payment for a specified number of years

Answer 23

Life income with period certain

Question 24

Who posses all the rights in an annuity?

Answer 24

Annuity owner

Question 25

What are accumulation units in annuities?

Answer 25

Ownership interest in the separate account (instead of buying shares, annuity holder purchases accumulation units)

Question 26

Annuity tables are different than mortality tables why

Answer 26

Since there is no insurance protection

Question 27

Insurers take $ from people who die quickly and

Answer 27

Pay to those who live much longer

Question 28

If an annuitant owner dies before annuitization period, the $ is paid to the beneficiary and they pay taxes on what

Answer 28

interest earned

Question 29

Rights of ownership on an annuity become effective when

Answer 29

As of the contract date

Question 30

When can you surrender a deferred annuity for cash?

Answer 30

during the accumulation period

Question 31

Who is responsible for paying the premium in an annuity

Answer 31

The policyowner

Question 32

When a policy owner surrenders the policy for cash they have exercised what

Answer 32

Nonforfieture option

Question 33

Surrender charge on an annuity is sometimes called what

Answer 33

Back end load

Question 34

Annuities waive surrender charges for what

Answer 34

Death and disability

Question 35

Death benefit on an annuity during the accumulation period is equal to what

Answer 35

Its cash value

Question 36

If the owner of a life income annuity with 10 year period certain dies after 13 years what does the beneficiary receive?

Answer 36

Nothing

Question 37

Does a life income annuity have a beneficiary?

Answer 37

No it is the riskiest choice

Question 38

On a joint life annuity when do payments stop?

Answer 38

At the death of the first annuitant

Question 39

Annuity with least amount of risk

Answer 39

Refund annuity

Question 40

Can you exchange an annuity for life insurance?

Answer 40

No but you can for another annuity under sec 1035

Question 41

Fixed annuities are backed by what

Answer 41

Insurers general account

Question 42

Fixed annuities

Answer 42

Guarantee a fixed return and are backed by the state guaranty association

Question 43

Equity indexed annuity

Answer 43

Rate of return based on a index of equity products

Question 44

Do equity indexed annuity’s have much purchasing power risk?

Answer 44

No because they’re linked to an index

Question 45

Employers can use annuities to fund a deferred compensation plan

Answer 45

But not a corporate pension plan

Question 46

Lottery payouts and structured settlements are usually funded by what

Answer 46

Annuities

Question 47

Most immediate annuities are purchased by whom

Answer 47

Those who wish to supplement their retirement income

Question 48

When recommending a variable annuity you should inquire about what

Answer 48

Applicants tax status