Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?
answer
Temporary annuity certain.
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Which of the following is considered to be the period when the accumulated value in an annuity is paid out?
answer
Annuitization period
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Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?
answer
Guaranteed lifetime withdrawal benefit.
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Which of the following is an annuity that is linked to a market-related index?
answer
Equity-indexed annuity.
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What happens to interest earned if the annuitant dies before the payout start date?
answer
It is taxable.
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Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?
answer
Life annuity certain
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Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
answer
Life Income Annuity
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Which of these is NOT considered to be a purpose of an annuity?
answer
Annuities are meant to create an estate.
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Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies?
answer
Life Only
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Who assumes the investment risk with a fixed annuity contract?
answer
The correct answer is "The insurer". It is the insurance company that bears the investment risk of a fixed annuity. The insurance company guarantees the annuitant's principal as well as a guaranteed minimum rate of return, even if the underlying assets underperform the guaranteed rate.
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An annuity is primarily used to provide
answer
Retirement income
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What is the nonforfeiture value of an annuity before annuitization?
answer
All premiums paid, plus interest, minus any withdrawals and surrender charge
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Which of these statements regarding the annuitant is CORRECT?
answer
The annuitant's life expectancy determines the annuity payments.
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If the annuitant dies before the annuity start date,
answer
The premiums paid plus interest will be given to the beneficiary.
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How do interest earnings accumulate in a deferred annuity?
answer
On a tax-deferred basis
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Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's
answer
income period
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Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called
answer
annuity certain
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Fixed period settlement options are considered to be a form of a(n)
answer
annuity
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Which of these annuities require premium payments that vary from year to year?
answer
flexible premium deferred annuity
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During the accumulation period, who can surrender an annuity?
answer
Policyowner
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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?
answer
Refund annuity
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An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?
answer
1 month
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How are annuities given favorable tax treatment?
answer
Gains are taxed at distribution
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How soon can the benefit payments begin with a deferred annuity?
answer
A minimum of 12 months after date of purchase
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An annuitant is guaranteed to NOT outlive their benefits with a(n)
answer
Guaranteed lifetime withdrawal benefit
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Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?
answer
Premiums paid plus interest earned is returned to the beneficiary
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The taxable portion of each annuity payment is calculated using which method?
answer
Exclusion ratio
question
Under a non-qualified annuity, interest is taxed after the
answer
exclusion ratio has been calculated
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