Insurance MCQ

N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? Answer: Flexible Installment Deferred

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? Answer: Income that cannot be outlived by the owner

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives Answer: The contract surrender value at that time

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) Answer: Immediate annuity

An individual who purchases a Life annuity is given protection against: Answer: the risk of living longer than expected

The type of annuity that can be purchased with one monetary deposit is called a(n) Answer: Immediate annuity

Which of the following is a characteristic of a variable annuity? Answer: Underlying equity investments

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Answer: Variable

Which of the following is NOT included in an annuity contract? Answer: AD&D rider

Which of the following best describes what the annuity period is A) The period of time during which accumulated money is converted into income payments B) The period of time from the accumulation period to the annuitization period C) The period of time during which money is accumulated in an annuity D) The period of time from the effective date of the contract to the date of its termination Answer: The period of time during which accumulated money is converted into income payments

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a A) Joint and survivor annuity. B) Deferred annuity. C) Pure annuity. D) Joint life annuity Answer: Joint life annuity

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed A) Forwarded to an investor B) Each contract's separate account C) The annuity owner's account D) The insurance company's general account Answer: The insurance company's general account

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits A) Variable period B) Variable amount C) Fixed period D) Fixed amount Answer: Fixed amount

The equity in an equity index annuity is linked to A) The annuitant's individual stock portfolio. B) The insurance company's general account investments. C) An index like Standard & Poor's 500. D) The returns from the insurance company's separate account Answer: An index like Standard & Poor's 500

Equity indexed annuities A) Are more risky than variable annuities. B) Are security instruments. C) Invest conservatively. D) Seek higher returns Answer: Seek higher returns

Why is an equity indexed annuity considered to be a fixed annuity A) It has modest investment potential. B) It has a fixed rate of return. C) It is not tied to an index like the S&P 500. D) It has a guaranteed minimum interest rate Answer: It has a guaranteed minimum interest rate

Which of the following is NOT true about a joint and survivor annuity benefit option A) Payments stop after the first death among the annuitants. B) A period certain option may be included. C) This option guarantees income for two or more recipients. D) The surviving annuitant may receive reduced payments Answer: Payments stop after the first death among the annuitants

Which of the following will NOT be an appropriate use of a deferred annuity A) Accumulating funds in an IRA B) Funding a child's college education C) Creating an estate D) Accumulating retirement funds Answer: Creating an estate

Which of the following is NOT true regarding the annuitant A) The annuitant's life expectancy is taken into consideration for the annuity. B) The annuitant receives the annuity benefits. C) The annuitant must be a natural person. D) The annuitant cannot be the same person as the annuity owner Answer: The annuitant cannot be the same person as the annuity owner

Which of the following can surrender a deferred annuity contract A) Only the insurance company for nonpayment of premiums B) The beneficiary after the owner's death C) Deferred annuity cannot be surrendered. D) Only the annuity owner Answer: Only the annuity owner