Annuities – Flashcards

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's surrender charge death benefit cash refund income period

How do interest earnings accumulate in a deferred annuity? On a tax credit basis On a tax-deferred basis On a tax-free basis On a taxable basis

Under a non-qualified annuity, interest is taxed after the deposits have been made death of the annuitant distribution of payments exclusion ratio has been calculated

Who assumes the investment risk with a fixed annuity contract? The owner The annuitant The insurer The beneficiary

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? Fixed period Interest only Installment refund Life income

Which type of annuity stops all payments upon the death of the annuitant? Life annuity Period certain annuity Cash refund annuity Joint and survivor annuity

Which of these statements regarding the annuitant is CORRECT? The contract can only be assigned by the annuitant The annuitant is the only individual who can surrender the contract The annuitant must also be the beneficiary The annuitant's life expectancy determines the annuity payments

Fixed period settlement options are considered to be a form of a(n) cash value loan variable life policy annuity Endowment

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made? Variable annuity Refund annuity Rebate annuity Return annuity

Which of these is NOT considered to be a purpose of an annuity? Annuities are intended to create an estate Annuities are intended to liquidate an estate Annuities are intended for the tax-free growth of principal Annuities are intended to distribute accumulated principal

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? Payments cease 5 years after the annuitant's death During periods of inflation, annuitants will experience an increase in purchasing power of their payments During periods of inflation, annuitants will experience a decrease in purchasing power of their payments Payment amounts can be unpredictable from month to month

An annuity is primarily used to provide retirement income disability income long-term care benefits death benefits

If the annuitant dies before the annuity start date, the benefits will be given tax-free only to a stated beneficiary nothing is given to the beneficiary the premiums paid will be given to the beneficiary the premiums paid plus interest earned will be given to the beneficiary

What happens to interest earned if the annuitant dies before the payout start date? It is taxable It is taxable only if no beneficiary is named It is not taxable It is only taxable if contract has been in force under one year

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? Payout period Accumulation period Deferred period Growth period

Which market index is normally associated with an indexed annuity's rate of return? NAIC SEC S & P 500 A & P 300

An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments? 1 month 6 months 12 months 24 months

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them? Life annuity certain Secure life annuity Irrevocable survivor annuity Guaranteed life annuity

How soon can the benefit payments begin with a deferred annuity? Anytime after date of purchase Anytime within 12 months after date of purchase A minimum of 6 months after date of purchase A minimum of 12 months after date of purchase

Which of these will have the highest monthly payout upon annuitization? Life with period certain Joint and survivor life Straight life Joint life

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies? Life only Life with period certain Cash refund Installment refund

During the accumulation period, who can surrender an annuity? Payor Annuitant Beneficiary Policyowner

What is the nonforfeiture value of an annuity before annuitization? All premiums paid All premiums paid plus interest All premiums paid minus any withdrawals and surrender charges All premiums paid, plus interest, minus any withdrawals and surrender charges

Which of these annuities require premium payments that vary from year to year? Flexible premium immediate annuity Flexible premium deferred annuity Fixed premium deferred annuity Fixed premium immediate annuity

When does an immediate annuity begin making payments? After multiple premiums have been paid After the first premium has been paid After policy has been active for one year After the incontestable period

The taxable portion of each annuity payment is calculated using which method? Exclusion Ratio Taxable Ratio Cost Basis Tax Basis

Which of the following is considered to be the period when the accumulated value in an annuity is paid out? Annuitization phase Accumulation phase Principal phase Period certain phase