Exam #2 (CH. 8-11) Flashcards
(119 cards)
T or F: The longer the retirement life expectancy, the greater the risk that a retiree will exhaust his or her retirement needs.
True
T or F: The average life expectancy for a 65-year-old male is approximately 18 years.
True
T or F: Defined contribution plans pay a fixed annuity for the life of the annuitant.
False
T or F: The four parties to an annuity contract include the annuitant, the owner, the insurance company issuing the contract, and the beneficiary.
True
T or F: Deferred annuities are always purchased with one, single, lump sum payment.
False
T or F: Annuity benefits are taxed as capital gains.
False
T or F: The term for annuity is always over a single life or a joint life.
False
T or F: A joint and survivor annuity always continues to pay 100% after the death of the first annuitant.
False
T or F: A single life annuity can be combined with a fixed term guarantee.
True
T or F: The amount of a life annuity benefit with a guaranteed term will be less than that without a term guarantee.
True
T or F: Mortality and expense charges for a variable annuity may exceed one percent.
True
T or F: Surrender charges are not used for variable annuities.
False
T or F: The annual reset (ratcheting) method is a common index method for equity-indexed annuities.
True
T or F: Variable annuities permit the owner to invest in traditional closed-end mutual funds.
False
T or F: Variable annuities have many fees and costs associated with them.
True
T or F: Fixed annuities, generally have significant cost and fees associated with them.
False
T or F: Variable annuities are more complex than fixed annuities.
True
T or F: Annuities provide an opportunity to defer income taxation on investment earnings.
True
T or F: Advantages of annuities include simplicity, low costs, tax advantages.
False
T or F: All deferred annuity contracts or subject to the Medicare surtax tax of 3.8%.
False
T or F: A non-qualified annuity is an annuity purchased with pre-tax dollars.
False
T or F: The exclusion ratio equals the portion of the payment that is subject to income tax.
False
T or F: A single premium deferred annuity purchased with after-tax funds will be subject to the minimum distribution rules.
False
T or F: Annuities are considered IRD assets.
True