ANNUITIES

Question 1

What payout option provides payments for annuitant’s whole life, but will cease at death?

Answer 1

the straight-life payout option

Question 2

what annuity’s growth is dependent on the performance of securities in a separate account?

Answer 2

a variable annuity

Question 3

T or F: an annuity contract uses different mortality tables than a life insurance policy

Answer 3

true

Question 4

what is another name for the annuity accumulation phase?

Answer 4

the pay-in phase

Question 5

traditional contract assets are placed in the insurance company’s _____ account

Answer 5

company’s general account

Question 6

the ____ rate is the percentage of the gain kept by an insurer, based on the overall return of an index.

Answer 6

the participation rate

Question 7

T or F: A flexible premium deferred annuity is designed for future income.

Answer 7

true

Question 8

what is the risk of the straight-life annuity payout option?

Answer 8

there is no beneficiary payout after the annuitant’s death

Question 9

annuity withdrawals prior to age 59 1/2 will be subject to a ___ % IRS penalty plus ____ of earnings.

Answer 9

10% IRS penalty plus federal taxation of earnings.

Question 10

what annuity provides a monthly income the varies depending on market performance?

Answer 10

a variable annuity

Question 11

what is another name for the annuity payout period?

Answer 11

the annuity phase

Question 12

what type of annuity has no accumulation period?

Answer 12

a lump-sum or single premium annuity

Question 13

the annuity benefit of a woman would be ____ than a man’s because a woman is expected to _____

Answer 13

the annuity benefit of a woman would be less than a man’s because a woman is expected to liver longer.

Question 14

interest earned with a deferred annuity grows on a ___ basis

Answer 14

tax-deferred basis

Question 15

annuity premiums may be paid as a _____, or on a ___ basis

Answer 15

lump sum, or on a periodic basis

Question 16

which annuity payout option pays the annuitant for life with no survivorship benefit?

Answer 16

the straight or pure life annuity payout

Question 17

what benefit does the installment refund option on an annuity certain payout allow the beneficiary

Answer 17

to continue to receive the remainder for the monthly income benefits

Question 18

identify the acronym: SPA

Answer 18

single premium annuity

Question 19

T or F: joint and last survivor payouts will cease after the first annuitant dies.

Answer 19

False. The joint and last survivor payouts continue payment until the last surviving annuitant dies.

Question 20

which annuity option does not guarantee an income for life, but rather an income for a predetermined number of years?

Answer 20

the annuity certain option

Question 21

describe a flexible premium deferred annuity

Answer 21

flexible payments (subject to monthly minimum), with tax-deferred growth until later withdrawn (e.g. at retirement)

Question 22

periodic annuity payments may be _____ or _____

Answer 22

level for flexible

Question 23

what type of annuity is designed to pay income at a later date?

Answer 23

deferred annuity

Question 24

an annuitant with a straight-life annuity dies after 9 years. How many years of benefit will his beneficiary receive?

Answer 24

$0. straight-life payments cease on the death of the annuitant.

Question 25

which annuity provides a guaranteed return--fixed or variable?

Answer 25

fixed annuities

Question 26

what factors affect the annuity payout amount?

Answer 26

interest rates, contribution amounts, and payout option selected

Question 27

annuitization is described as the ____ of an estate or pool of money

Answer 27

systematic liquidation

Question 28

which annuity allows for stock market appreciation with guaranteed downside protection?

Answer 28

an equity-indexed annuity

Question 29

a single premium annuity may also be called a ____ annuity

Answer 29

lump-sum annuity

Question 30

the cash refund option of an annuity certain payouts provides the beneficiary a ___ refund of remaining benefits

Answer 30

lump-sum

Question 31

what annuity payout option pays income to more than one party and stops upon death of any party listed on the contract?

Answer 31

the joint life option

Question 32

all variable contract assets are placed in the insurance company's _____ account

Answer 32

company's separate account

Question 33

a client dies soon after annuitizing with a straight-life payout option. is there a death benefit to a beneficiary?

Answer 33

no, the contract is based on the annuitant's life only

Question 34

an immediate annuity must begin making income payments within ___ days of the initial deposit.

Answer 34

30 days

Question 35

the contribution phase of an annuity is called the ____ period.

Answer 35

accumulation period

Question 36

an annuity is designed to protect a person against ___ his income.

Answer 36

outliving

Question 37

currently, ____ companies are the only type of company that may sell annuities

Answer 37

insurance companies

Question 38

T or F: the annuity owner and the annuitant do not need to be the same person

Answer 38

True, an annuity can be purchased for someone other than the owner

Question 39

a flexible premium annuity usually requires a ___ monthly contribution

Answer 39

minimum monthly contribution

Question 40

at annuitization (payout), accumulation units are exchanged for ___ unitys

Answer 40

annuity units

Question 41

T or F: an annuity with a 30-pay certain annuity payout guarantees at least 20 years of payments will occur.

Answer 41

True, at least 20 years of payment are guaranteed to the annuitant, the beneficiary, or both

Question 42

which annuity provides a fixed, guaranteed minimum rate of return?

Answer 42

a fixed annuity

Question 43

withdrawls from an annuity may not take place prior to age ___ without penalty

Answer 43

59 1/2

Question 44

the ____ rate is the percentage of the gain by an insurer, based on the overall return of an index?

Answer 44

participation rate

Question 45

an annuitant with a 20 - year certain annuity dies after 7 years, how many years of benefits will a beneficiary receive?

Answer 45

the beneficiary will receive the remaining 13 of the 20 years

Question 46

T or F: the annuity owner and the annuitant do not need to be the same person

Answer 46

true, an annuity can be purchased for someone other than the owner