Podcast
Questions and Answers
Which of the following is NOT true regarding the annuitant?
Which of the following is NOT true regarding the annuitant?
- The annuitant can be a corporation.
- The annuitant must be a natural person.
- The annuitant cannot be the same person as the annuity owner. (correct)
- The annuitant can be the same person as the annuity owner.
What describes the nonforfeiture value of a deferred annuity surrendered prior to annuitization?
What describes the nonforfeiture value of a deferred annuity surrendered prior to annuitization?
- The surrender value is the cash value only.
- The surrender value is 50% of the premium paid.
- The surrender value should be equal to 100% of the premium paid, minus any prior withdrawal and surrender charges. (correct)
- The surrender value is not applicable.
What interest rate will the insurer pay to its policyholders if the guaranteed minimum interest is set at 3% and during a downturn investments only drew 2.5%?
What interest rate will the insurer pay to its policyholders if the guaranteed minimum interest is set at 3% and during a downturn investments only drew 2.5%?
3%
Which of the following statements is true about a corporation as the annuitant?
Which of the following statements is true about a corporation as the annuitant?
Where is the money placed when a fixed annuity owner pays their monthly annuity premium?
Where is the money placed when a fixed annuity owner pays their monthly annuity premium?
The waiver of a surrender charge on an annuity contract can be applied if the annuitant is confined to a long-term care facility for less than 30 days.
The waiver of a surrender charge on an annuity contract can be applied if the annuitant is confined to a long-term care facility for less than 30 days.
What type of annuity did a couple buy if the husband dies and the wife continues to receive $125.50 per month for as long as she lives?
What type of annuity did a couple buy if the husband dies and the wife continues to receive $125.50 per month for as long as she lives?
What comprises most of a life insurance company's general account in reference to fixed annuities?
What comprises most of a life insurance company's general account in reference to fixed annuities?
What is the advantage of having a qualified annuity?
What is the advantage of having a qualified annuity?
How long is the free-look period for a contract holder who is 67 years old when he applies for an annuity contract?
How long is the free-look period for a contract holder who is 67 years old when he applies for an annuity contract?
Who receives the annuity benefits if the annuitant dies during the accumulation period?
Who receives the annuity benefits if the annuitant dies during the accumulation period?
What settlement option did a married couple select if the husband dies and the wife continues to receive payments until her death?
What settlement option did a married couple select if the husband dies and the wife continues to receive payments until her death?
During which time period is the accumulated money in an annuity converted into a stream of income?
During which time period is the accumulated money in an annuity converted into a stream of income?
Which provision allows the owner to surrender the annuity if interest rates drop to a specified level?
Which provision allows the owner to surrender the annuity if interest rates drop to a specified level?
A group annuity can be owned by individual employees.
A group annuity can be owned by individual employees.
The payments from a deferred annuity will stop when the annuitant dies.
The payments from a deferred annuity will stop when the annuitant dies.
What will the beneficiary receive if an annuitant dies before annuitization?
What will the beneficiary receive if an annuitant dies before annuitization?
What are the disclosure requirements for an application for the annuity received from a direct mail solicitation?
What are the disclosure requirements for an application for the annuity received from a direct mail solicitation?
Installments for a fixed period annuity settlement option is a life contingency option.
Installments for a fixed period annuity settlement option is a life contingency option.
Which of the following best describes a bail-out provision?
Which of the following best describes a bail-out provision?
During the accumulation period of an annuity, the payments grow tax deferred.
During the accumulation period of an annuity, the payments grow tax deferred.
For installment payments at a fixed amount, the payments will stop when the annuitant dies.
For installment payments at a fixed amount, the payments will stop when the annuitant dies.
Which of the following is NOT true regarding Equity Indexed Annuities?
Which of the following is NOT true regarding Equity Indexed Annuities?
What licenses are required to sell variable annuities?
What licenses are required to sell variable annuities?
Both equity indexed annuities and fixed annuities have a guaranteed minimum interest rate.
Both equity indexed annuities and fixed annuities have a guaranteed minimum interest rate.
Study Notes
Annuities Overview
- An annuitant cannot be the same as the annuity owner.
- Nonforfeiture value of a surrendered deferred annuity equals 100% of premiums paid minus withdrawals and charges.
- Fixed annuities guarantee a minimum interest rate of 3%, even if investments earn less.
Types of Annuities
- Annuity must have a natural person as the annuitant, not a corporation.
- Joint life annuities pay benefits until the death of the first spouse, after which payments stop.
- Joint and survivor annuities continue payments to the surviving spouse at a reduced rate after the first spouse's death.
Investment Details
- Premium payments are placed in the insurance company's general account and primarily consist of conservative investments such as bonds.
- Bail-out provision allows surrender of the annuity without charges when interest rates fall below a certain level.
Tax and Financial Aspects
- Qualified annuities offer favorable tax treatment for contributions and distributions.
- Accumulated funds are turned into income during the annuitization period, which occurs after a free-look period of 30 days for applicants over 65.
Beneficiary and Payout Considerations
- If the annuitant dies before annuitization, the beneficiary receives either the paid amount or cash value, whichever is higher.
- Disclosure requirements must include a disclosure document and a buyer's guide if solicited through direct mail.
Additional Provisions and Requirements
- Waiver of surrender charges may apply if the annuitant is confined to long-term care for at least 30 days.
- Selling variable annuities requires both a life insurance license and a securities license.
- Equity Indexed Annuities earn similar or higher interest rates compared to fixed annuities.
Common Misunderstandings
- Group annuities are not owned by individual employees but rather by groups.
- Deferred annuities are not suitable for creating an estate.
- Payments for a fixed amount annuity do not cease upon the annuitant's death; instead, they continue until the agreed amount is disbursed.
Miscellaneous Notes
- Installments for a fixed period are not classified as life contingency options.
- Most life insurance companies' general accounts are composed of conservative investments.
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Description
This quiz covers the essential concepts of annuities, including definitions, types, and investment details. You'll learn about the roles of annuitants and owners, the characteristics of various annuity types, and the financial implications involved. Test your knowledge of the tax aspects and nonforfeiture values of deferred annuities.
