Chapters 9-11

Question 1

The time at which the retirement account truly belongs to the employee

Answer 1

Vesting

Question 2

Allows the employee to defer some of their current salary to provide for their retirement

Answer 2

Cash or Deferred Arrangement Plans (CODA)

Question 3

A contract offered by the life insurance industry that provides stipulated payments at regular intervals (usually monthly) for the life of the
annuitant with no refund provisions, once the annuitant dies. Also called straight life income annuity or straight life annuity

Answer 3

Life Annuity

Question 4

A personal tax-advantaged savings account in which eligible individuals can contribute up to a certain amount each year.

Answer 4

Individual Retirement Account (IRA)

Question 5

With an annuity, it is the period of time, usually before retirement and withdrawals, that the annuitant is paying premium that accumulates
interest tax deferred

Answer 5

Accumulation Period

Question 6

A premium that remains unchanged, fixed, constant, or guaranteed for the life of the policy.

Answer 6

Level Premium

Question 7

A life insurance policy or annuity that is paid in full with one premium at the beginning of the contract

Answer 7

Single Premium

Question 8

A premium method that allows the amount and timing to vary upon the policyholder’s discretion.

Answer 8

Flexible Premium

Question 9

An annuity contract that pays income benefits after a single premium is received

Answer 9

Immediate Annuity

Question 10

An annuity contract that will not pay the income benefits until a later date (usually when the annuitant reaches retirement age)

Answer 10

Deferred Annuity

Question 11

A contract offered by the life insurance industry that provides stipulated payments at regular intervals (usually monthly) for the life of the
annuitant with no refund provisions, once the annuitant dies.

Answer 11

Life/Straight Life Annuity

Question 12

A contract offered by the life insurance industry that provides stipulated payments at regular intervals to two or more annuitants as long as one of them lives (survives)

Answer 12

Joint and Survivor Annuity

Question 13

A type of annuity that guarantees the interest rate on annuity premiums and the amount of annuity payments received. It does not guarantee, though, to keep pace with inflation.

Answer 13

Fixed Annuity

Question 14

A type of annuity that does not guarantee the interest rate on annuity premiums or the amount of annuity payments received. It allows, though, for the possibility of annuity payments to keep pace with
inflation

Answer 14

Variable Annuity

Question 15

Insurance company’s account for investing policyholder premiums in safe and conservative investments.

Answer 15

General Account

Question 16

A type of fixed or guaranteed annuity that offers excess interest based on the insurance company’s investment of premium compared to a stock
index, such as the S&P 500 index.

Answer 16

Equity-Indexed Annuity

Question 17

A retirement plan that has not been approved by the IRS; therefore, does not receive favorable tax treatment

Answer 17

Nonqualified Retirement Plan

Question 18

A retirement plan that has been approved by the IRS; therefore, receives favorable tax treatment.

Answer 18

Qualified Retirement Plan

Question 19

Type of qualified retirement plan for the self-employed and their employees

Answer 19

Keoghs Plans

Question 20

A policy that covers persons with a common affiliation of interest such as an employer group, under one master policy.

Answer 20

Group Insurance

Question 21

A life or health policy covering a valuable employee whose absence would financially hurt the business. The key person is the insured and the business is the policyowner

Answer 21

Key Person Insurance

Question 22

Issued by group contracts (typically employer groups) that summarizes coverage to insured employees

Answer 22

Certificate of Coverage

Question 23

A group insurance policy in which the policyowner (an employer) and insureds (employees) share the cost of the plan. Generally, insurance
companies will require 75% or more of all eligible employees to participate.

Answer 23

Contributory Plan

Question 24

A group insurance policy in which the policyowner (the employer) pays the entire premium for employees’ benefits. The plan must insure 100% of all eligible employees.

Answer 24

Noncontributory Plan

Question 25

Group term to individual life without proof of insurability

Answer 25

Conversion Privilege

Question 26

A voluntary plan offered by an employer that allows employees to pick and choose among various types of insurance coverages, such as
medical expense, dental, vision, life, disability income, critical illness, and long-term care.

Answer 26

Worksite Insurance Plans

Question 27

The monthly amount you will receive if you start your benefits at your full retirement age

Answer 27

Primary Insurance Amount

Question 28

Mandatory insurance purchased by almost all employers to cover an
employee’s injury, disability, death, or medical expenses due to occupational causes.

Answer 28

Worker’s Compensation

Question 29

The federal program that is formally called Old Age, Survivors and Disability Income Insurance, but commonly known as Social Security. It
provides benefits for retirement, death or disability.

Answer 29

Social Security

Question 30

A status of limited eligibility under Social Security that provides only death benefits

Answer 30

Currently Insured

Question 31

A status of eligibility under social security that provides for complete benefits.

Answer 31

Fully Insured

Question 32

A type of business continuation plan that gives the remaining business owner(s), the predetermined legal right to purchase a disabled owner’s
interest at a predetermined price. Proceeds to purchase the disabled owner’s interest come from a disability income policy.

Answer 32

Disability Buy-Sell Agreement

Question 33

A period of time when Social Security survivor benefits are not available to the surviving spouse and/or children.

Answer 33

Blackout Period