Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). Assume that Juanita receives 12 monthly payments of $500 the first year. How much taxable income must she report? A) $3,000 B) $4,000 C) […]
The fundamental purpose of a variable annuity is to A) provide funding flexibility to the purchaser. B) provide a hedge against inflation. C) fund the purchase of cash value life insurance. D) guarantee a fixed-dollar benefit throughout retirement. ANSWER Answer: B
An immediate life annuity offers all of the following benefits EXCEPT A) Immediate annuity payments are entirely exempt from federal income tax. B) Simplicity for the purchaser as he or she does not have to manage investment funds. C) Security for the purchaser as stable lifetime income that cannot be outlived is provided. D) The […]
Under an equity-indexed annuity, what name is given to the percentage increase in the stock index that is credited to the contract? A) the expense rate B) the exclusion ratio C) the indexing method D) the participation rate ANSWER Answer: D
Which of the following statements is (are) true concerning the joint and survivor annuity settlement option? I. Under this option, payments begin after the first annuitant dies. II. This settlement option is often selected by married couples. A) I only B) II only C) both I and II D) neither I nor II […]
Brad funded a life annuity through installment payments. At age 60, he decided to elect an annuity settlement option and to begin to receive payments. Which of the following annuity payout options will provide Brad with the highest monthly income? A) life annuity (no refund) B) life income with payments guaranteed for 5 years C) […]
Cassie, age 62, paid a life insurer $100,000 in exchange for a life annuity. If Cassie dies before receiving 120 monthly payments from the insurer, the remaining payments will be made to a beneficiary. If Cassie dies after receiving 120 payments, no additional payments are made by the insurer. The annuity option Cassie selected it […]
Stan paid an insurance company $50,000 for a fixed annuity when he was 50 years old. At age 62, Stan plans to begin to receive payments from the insurer. There are no guarantees on the number of payments he will receive. Based on the description provided, this annuity can be described as a(n) A) deferred […]
During the funding period, the premiums paid for a variable annuity are used to purchase A) annuity units. B) immediate participation shares. C) mutual fund shares. D) accumulation units. ANSWER Answer: D
Which of the following statements is (are) true with respect to a joint-and-survivor annuity? I. Some joint-and-survivor annuities reduce the income payment after the first annuitant dies. II. No payments are made after the first annuitant dies. A) I only B) II only C) both I and II D) neither I nor II […]
