Annuity - Lesson 10 Flashcards
A life annuity with period certain pays the annuitant:
For a specified minimum number of years, or the rest of his life, or which ever is longer.
A period of time in which a deferred annuity builds it’s proceeds taxed deferred is referred to as:
An accumulation period.
What is true about a variable annuity?
The value of the annuity unit may change.
Life annuity offers protection against the risk of:
Living longer than anticipated
Difference between a variable annuity and fixed annuity is:
Variable annuities are sold by life agents who must have a securities license.
The annuitants benefits are guaranteed to maintain their purchasing power during inflationary periods. True or false?
False
Todd purchased a life annuity with a 10-year period certain option. He died after receiving payments for six years. His beneficiary would receive:
Payments for four years
Regarding variable annuity: the number of annuity units will decrease as payments are made to the annuitant. True or false?
False
An annuity liquidates an estate over a period of time. True or false?
True
What type of an annuity provides payments for life at regular intervals with no further payments at death?
Straight life
How are annuities funded?
- Lump sum deferred
- Periodic payment deferred
- Lump sum immediate
Which type of annuity accumulates funds in units that are tied to the value of an investment portfolio?
Variable annuity
While life-insurance creates an immediate estate, annuities do what?
Liquidate an estate
What is the function of the annuity?
To provide the annuitant with a payment that he cannot outlive.
An annuity contract is between whom?
The contract owner and the insurer.
