14

Question 1

Period when accumulated funds converted into income payments

Answer 1

Annuity period

Question 2

It is true regarding accumulation period that

Answer 2

It is period during which payments grow tax deferred

Question 3

The owner of annuity must be the party to receive benefits

Answer 3

False owner purchases and has rights but doesnt have to rec benefits

Question 4

Pres starting annuity decides corporation will be annuitant. Annuitant

Answer 4

Must be a natural person

Question 5

Not true of acc period of annuity

Answer 5

Would not occur in deferred annuity

Question 6

Whose life expectancy taken into account w annuity

Answer 6

Annuitant

Question 7

During accumulation period funds are paid

Answer 7

Into annuity

Question 8

During annuity period

Answer 8

Funds are paid out to the annuitant

Question 9

Annuity income is based upon the following

Answer 9

Amount of premium paid or cash value accumulated, frequency of payment, interest rate, annuitant’s age and gender

Question 10

If life expectancy longer

Answer 10

Smaller income installments

Question 11

65 yr old male has higher annuity income payments than

Answer 11

45 year old male or 65 year old female as women live longer statistically

Question 12

Shorter life expectancy equals

Answer 12

Higher benefit

Question 13

Longer life exp equals

Answer 13

Lower benefit

Question 14

Annuities are purchased to provide supplement

Answer 14

Retirement income

Question 15

Annuities are purchased to fund or help

Answer 15

College education or any situation requiring steady stream of income in future

Question 16

Annuities are used to provide

Answer 16

Structured settlements which would take on form of court settlement arising from civil lawsuit or state lottery winner

Question 17

Function of annuity is that of

Answer 17

Liquidating a principal sum regardless of how it was accumulated

Question 18

Can be classified according to how prem are paid into the annuity how invested and how benefits are paid out

Answer 18

Annuities

Question 19

Classification of annuities

Answer 19

Premium payment method: single premium vs periodic

Question 20

When income payments begin: immediate vs deferred

Answer 20

Classification of annuities

Question 21

How premiums are invested: fixed vs variable

Answer 21

Classification of annuities

Question 22

Disposing of proceeds: pure life annuity certain or life refund annuity

Answer 22

Classification of annuities

Question 23

Two ways to classify annuities

Answer 23

Single premium one lump
Periodic installments

Question 24

Periodic payment annuities can be either

Answer 24

Level premium where owner pays fixed installment or flexible premium where frequency varies and amount varies

Question 25

Annuities may be classified as

Answer 25

Fixed or variable depending on how payments are invested

Question 26

Guaranteed minimum rate of interest to be credited to purchase payments; income payments do not vary one payment to next; company guarantees specified dollar amount for each payment and length the of period as determined by settlement option chosen by annuitant

Answer 26

Fixed annuity

Question 27

Disadvantage to fixed annuities

Answer 27

Purchasing power may be eroded over time due to inflation

Question 28

Knows exact amount of each payment recd from annuity during annuity period

Answer 28

Level benefit payment amount

Question 29

Hedge against inflation and variable from standpoint that annuitant may rec different rates of return on funds paid into annuity

Answer 29

Variable annuity