What are the two phases of an annuity?
Accumulation and Annuitization
What causes a variable annuity benefit to vary?
The annuity's underlying investments.
What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and ceases at the annuitant's death?
Pure Life
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
Beneficiary
How long is income paid under a pure life annuity?
Only for the life of the annuitant.
In an annuity, the accumulated money is converted into a stream of income during which phase?
Annuitization Period
What type of license(s) is/are required in order to sell variable annuities?
A Life Insurance License and a Securities License
With a single premium deferred annuity, when will the annuity payments become available?
No sooner than 1 year after the annuity purchase.
An individual has a contract that will provide him with a certain amount of income for the rest of his life. This is not, however, a life insurance policy. What type of contract does this person have?
Annuity
What type of annuity can be purchased with a single premium?
Immediate Annuity
What are the two classifications of annuities according to the time when annuity payments begin?
Immediate and Deferred
What is the difference between a single premium and a flexible premium payment options in a deferred annuity?
The number of payments that purchase the annuity.
What type of annuity credits its interest based upon an index such as Standard and Poors 500?
Equity Indexed Annuity
How soon can income payments begin in an immediate annuity?
No later than 1 year from the time of annuity purchase.
Who bears the investment risk in a fixed annuity?
The Insurer
If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?
The Annuitant's Estate
How long will a life annuity with a 15-Year period certain pay?
For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years.
How are annuities classified depending on how many lives they cover?
Single Life and Multiple Life Annuities
What are the two types of refund life annuities?
Cash Refund and Installment Refund
What type of annuity requires an agent to have a securities license?
Variable Annuity
Whose life expectancy is taken into consideration in an annuity contract?
Annuitant
What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?
Straight Life
An annuity purchased with multiple payments that begins income payments after one year from the moment of purchase is known as what type of annuity?
Flexible Premium Deferred Annuity
Who possesses all the rights in an annuity?
Annuity Owner
In flexible premium payment annuities, the term "flexible" refers to what?
Amount of Premium
What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?
Life Income with Period Certain
What is the main reason for purchasing an annuity?
To provide income that the annuitant cannot outlive.
Can a business or a corporation be an annuitant?
No, an annuitant must always be a natural person.
Regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?
The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after ant annuitant's death.
If the annuitant dies before the annuitization period starts, what will the beneficiary receive?
Either the amount paid into the annuity or the cash value, whichever is greater.
If an annuity provides a set amount of income for two or more person with the income ceasing upon the first death, what type of annuity is that?
Joint Life Annuity
If the current interest rate on an annuity is higher than the guaranteed rate, which rate will the annuity owner receive as part of the annuity payment?
Current
What are accumulation units in annuities?
Ownership interest in the separate account, instead of buying shares, the annuity holder purchases accumulation units.
What is a disadvantage of owning a fixed annuity, as opposed to variable?
In times of inflation, the benefit of a fixed annuity will have decreased purchasing power.
Who receives income payments from an annuity?
Annuitant