4 Questions
- Which of the following types of annuity contracts would your customer not be able to purchase?
A. Periodic payment deferred annuity
B. Periodic payment immediate life annuity
C. Lump-sum payment immediate life annuity
D. Lump-sum payment deferred annuity
Periodic payment immediate life annuity
- Which of the following annuities includes augmentation of the premium payments by the insurance company?
A. Fixed annuity
B. Combination annuity
C. Equity index annuity
D. Bonus annuity
Bonus annuity
- An insurance company offering a variable annuity makes payments to annuitants on the 15th of each month. The contract has an AIR of 3%. In July of this year, the contract earned 4%. In August, the account earned 6%. If the contract earns 3% in September, the payments to annuitants in October will be
A.greater than the payments in September.
B. less than the payments in September.
C. the same as the payments in September.
D. less than the payments in August.
the same as the payments in September.
- A customer is considering the purchase of either a variable annuity or variable life insurance. In discussing the merits of the respective contracts, a registered representative may state that all of the following characteristics are common to both contracts except
A. all gains are tax deferred
B. the AIR is a factor in determining certain values.
C. death benefits are received income tax free.
D. the representative must have a securities license and an insurance license.
death benefits are received income tax free.
Study Notes
Annuity Contracts
- A customer cannot purchase a Periodic payment immediate life annuity.
Annuity Types
- A Fixed annuity is a type of annuity that includes augmentation of the premium payments by the insurance company.
Variable Annuity
- In a variable annuity, the insurance company makes payments to annuitants monthly.
- The AIR (Annual Interest Rate) affects the payments to annuitants.
- If the contract earns more than the AIR, payments will increase, and if it earns less, payments will decrease.
Variable Annuity vs. Variable Life Insurance
- Both variable annuities and variable life insurance have tax-deferred gains.
- The AIR is a factor in determining certain values for both contracts.
- Death benefits from variable life insurance are received income tax-free.
- A representative must have both a securities license and an insurance license to sell both products.
Test your knowledge of annuity contracts by identifying which type of annuity contract a customer would not be able to purchase. Choose the correct option from the list provided.
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