Exam 15: Annuities

A) 95
B) 100
C) 105
D) 115

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A) for 5 years or until the annuitant's death, whichever event happens last
B) for only the first 5 years of the liquidation period
C) only if the insured dies within the first five years
D) for 5 years or until the annuitant's death, whichever event happens first

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A) at the beginning of the accumulation phase, the annuitant irrevocably selects the distribution method for the liquidation phase
B) there is considerable flexibility in choosing the length of the accumulation phase
C) the liquidation period is a function of several factors including when the annuitant dies
D) generally, a longer accumulation period results in higher liquidation payments (all other things being equal)

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A) exclusion ratio
B) refund ratio
C) vested ratio
D) combined ratio

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A) Annuities can be used to fund structured settlements in negligence cases
B) Annuities are useful for generating an income that cannot be outlived
C) Annuities are good retirement funding vehicles for persons in poor health
D) Annuities maximize cash flow for people who are willing to liquidate their assets

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A) FICA deduction ratio
B) rate of return on the annuity
C) exclusion ratio
D) none of the above

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A) Straight life annuity
B) 5 year period certain, joint an 2 survivor
C) Installment refund
D) Cannot be determined from the given information

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Insurers classify annuities ac...

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A) tax must be paid annually on the investment income that accrues during the accumulation period
B) if funds are withdrawn during the accumulation period, they are taxed as ordinary income
C) payments received during the liquidation phase are partially exempt from taxation
D) there is no tax since each payment is considered compensation for a loss (ie., retirement)

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The annuity contract allows th...

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A) age
B) sex
C) amount premium the annuitant has paid
D) number of years worked

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A) when liquidation payments begin
B) method of paying premiums
C) number of lives insured
D) maximum number of payments guaranteed

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A) retirement period
B) deferral period
C) accumulation period
D) liquidation period

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A) they do not have minimum required deposits for FPDAs
B) there is considerably more adverse selection among persons purchasing FPDAs
C) FPDA purchasers have much greater flexibility in making premium payments
D) This is a trick question; insurers do not impose higher administrative charges on FPDAs versus SPDAs

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