Chapter 9 Exam: Annuities

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

  1. the premiums paid to date

  2. the current contract surrender value

  3. nothing

  4. half of the current surrender value

How does an indexed annuity differ from a fixed annuity?

  1. Fixed annuity owners receive credited interest tied to the fluctuations of the linked index

  2. Indexed annuity owners receive annual dividends

  3. Fixed annuity owners have a separate investment account

  4. Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

  1. Retroactive

  2. Immediate

  3. Deferred

  4. Universal

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

  1. Immediate Fixed

  2. Flexible Installment Deferred

  3. Quarterly Flexible

  4. Adjustable Deferred

Variable annuities may invest premiums in each of the following, EXCEPT:

  1. Insurer's corporate business account

  2. Junk bonds

  3. Common Stock

  4. Money Market securities

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n):

  1. Variable annuity

  2. Immediate annuity

  3. Flexible Premium Deferred annuity

  4. Straight Life annuity

K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?

  1. Single Premium Immediate Joint with Survivor Annuity

  2. Single Premium Deferred Annuity with Period Certain

  3. Flexible Premium with Period Certain

  4. Flexible Premium with Survivor Annuity

Which of the following are Equity Indexed annuities typically invested in?

  1. Money Market accounts

  2. Corporate Bonds

  3. S&P 500

  4. Municipal Bonds

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)

  1. Straight Refund annuity

  2. Installment Refund annuity

  3. Equal Value annuity

  4. Joint Refund annuity

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

  1. MUST make half-payments to the beneficiary

  2. has the option to continue making payments based on what has already been paid out

  3. does NOT have to make any further payments

  4. MUST make full payments to the beneficiary