5.1 Annuities Flash

Question 1

How are annuities classified depending on how many lives they cover

Answer 1

single life and multiple life annuities

Question 2

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

Answer 2

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 3

Who receives income payments from an annuity

Answer 3

annuitant

Question 4

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

Answer 4

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

Question 5

What annuity settlement option provides income payments to the annuitant for the duration of their life and ceases at their death?

Answer 5

pure life

“life-only or straight life”

Question 6

what is the disadvantage of owning a fixed annuity, as opposed to a variable?

Answer 6

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

Question 7

what type of license(s) is/are required in order to sell variable annuities

Answer 7

insurance and securities

Question 8

At annuity purchased within multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuitity?

Answer 8

flexible (premium deferred) annuity

Question 9

who possesses all rights in an annuity

Answer 9

annuity owner

Question 10

what type of annuity can be purchased with a single premium

Answer 10

immediate annuity

Question 11

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid

Answer 11

annuitant’s estate

Question 12

what type of annuity credits its interest based upon an index such as S&P500.

Answer 12

equity indexed annuity

Question 13

what type of annuity requires an agent to have a securities license?

Answer 13

variable annuity

Question 14

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

Answer 14

annuitization period

Question 15

how long is income paid under a pure life annuity

Answer 15

only for the life of the annuitant

Question 16

what are the two phases of an annuity?

Answer 16

accumulation and annuitization (or pay-in and pay-out)

Question 17

If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the annuity owner receive as part of the annuity payment

Answer 17

current

Question 18

regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?

Answer 18

The annuitant receives payments from the annuity during the annuitization period, the beneficiary receives benefits after the annuitant’s death

Question 19

what causes a variable annuity benefit to vary?

Answer 19

the annuity’s underlying investments

Question 20

what is the difference between a single premium and a flexible premium payment options in a deferred annuity?

Answer 20

the number of payments that purchase the annuity

Question 21

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

Answer 21

amount of premium

Question 22

How soon can income payments begin in an immediate annuity?

Answer 22

No later than 1 year from the time of annuity purchase

Question 23

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

Answer 23

beneficiary

Question 24

What type of annuity is suitable for someone who want to select the benefits option that will pay the largest amount only for as long as the annuitant lives?

Answer 24

straight life

Question 25

an individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does this person have?

Answer 25

annuity

Question 26

Who bears the investment risk in a fixed annuity?

Answer 26

the insurer

Question 27

What are the two classifications of annuities according to the time when annuity payments begin?

Answer 27

immediate and deferred

Question 28

whose life expectancy is taken into consideration in annuity contract

Answer 28

annuitant

Question 29

what annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years.

Answer 29

life income with period certain

Question 30

if an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?

Answer 30

Joint life annuity

Question 31

what is the main reason for purchasing an annuity

Answer 31

to provide income that the annuitant cannot outlive

Question 32

with a single premium deferred annuity, when annuity payments do become available

Answer 32

No sooner than 1 year after the annuity purchase

Question 33

What are the accumulation units in annuities

Answer 33

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

Question 34

What are the two types of refund life annuities?

Answer 34

cash refund and installment

Question 35

can a business or corporation be an annuitant?

Answer 35

No, an annuitant must always be a natural person.