Question 1

Which of the following does not influence how an insurer calculates monthly annuity benefits?

Accepted Answer

A)  age
B)  health status of insured annuitant
C)  sex
D)  amount of the premium the annuitant has paid

Question 2

The main purpose of an annuity is to protect against:

Accepted Answer

A)  premature death
B)  outliving one's income
C)  growing old
D)  none of the above

Question 3

Explain how an annuity,10 years certain would work.

Accepted Answer

An annuity 10 years certain would pay re...

Question 4

Choose the recipient of the largest dollar amount of annual annuity receipts for a $100,000 single-premium immediate annuity:

Accepted Answer

A)  male age 65
B)  female age 65
C)  male age 25
D)  female age 20

Question 5

A cash refund annuity would have lower monthly benefits per $1,000 of premium than an installment refund annuity.

Accepted Answer

A) True 
 B)False

Question 6

Why do insurers use a different mortality table for annuity benefit calculations than they use for life insurance premium calculations?

Accepted Answer

A)  Annuities require more stringent underwriting than life insurance
B)  The average life expectancy of an annuity applicant is greater than that of a life insurance applicant
C)  The health status of annuity applicants is generally worse than that of life insurance applicants
D)  People with a greater-than-average likelihood of premature death are typically the ones who want to purchase annuities.

Question 7

The variable annuity:

Accepted Answer

A)  pays a fixed dollar amount for a variable length of time
B)  pays an annuity to a variable number of people
C)  overcomes the problem of inflation and the loss of purchasing power
D)  accepts variable amounts of deposits on a periodic basis during the accumulation period

Question 8

In an annuity the risk of dying too soon is transferred to the insurer.

Accepted Answer

A) True 
 B)False

Question 9

An annuity 5 years certain pays for 5 years or the death of the annuitant,whichever comes first.

Accepted Answer

A) True 
 B)False

Question 10

Life income annuities could be beneficial to all of the following persons except:

Accepted Answer

A)  individuals just beginning retirement
B)  childless couples without close living relatives
C)  individuals in poor health
D)  couples with adult children who are helping to support their parents

Question 11

A life annuity that pays nothing to the beneficiary after the annuitant dies is called a __________ annuity.

Accepted Answer

A)  period certain annuity
B)  straight life annuity
C)  refund annuity
D)  joint and last survivor annuity

Question 12

Ron Liven is a retiree receiving a monthly annuity payment. This year his annuity payment is $4,000 per month. Last year,it was $3,700 per month,and the year before it was $3,500. Ron does NOT know what his payment will be NEXT year. What type of annuity does he have?

Accepted Answer

A)  fixed incremental increase
B)  installment refund
C)  cash refund
D)  variable annuity

Question 13

Fixed dollar annuities are widely used as a hedge against inflation.

Accepted Answer

A) True 
 B)False  False

Question 14

Oprah has $250,000 and wishes to purchase a single-premium annuity. All other things being equal,which of the following annuities will provide her with the smallest monthly liquidation payment?

Accepted Answer

A)  20 year period certain, joint and 2/3 survivor, single premium
B)  20 year period certain, single premium
C)  20 year period certain, joint and 2 survivor, single premium
D)  Straight life annuity, single premium.

Question 15

It is not possible to have a level premium,immediate annuity.

Accepted Answer

A) True 
 B)False  True

Question 16

Assume you are analyzing two separate annuity pools. Pool A has significantly higher mortality (deaths/thousand) than Pool B. Holding other factors constant,which pool will make higher payments per month to each annuitant?

Accepted Answer

A)   A
B)  B
C)  the monthly liquidation payments will be equal
D)  we cannot say, because mortality is not an important factor in calculating annuity payments A

Question 17

A joint-and-one-half survivor annuity covers two people,but the annuity payments are cut in half at the death of the first annuitant.

Accepted Answer

A) True 
 B)False

Question 18

Explain briefly how annuity distributions are taxed.

Accepted Answer

When distributions occur out of an annui...

Question 19

A life annuity that pays nothing after the annuitant's death is a _______________ annuity.

Accepted Answer

A)  period certain
B)  straight life
C)  refund
D)  single premium deferred

Question 20

Which annuity provides for a built-in reduction of monthly payments after a specified event occurs?

Accepted Answer

A)  joint annuity
B)  joint and last survivor annuity
C)  pure reduction annuity
D)  joint and one half survivor annuity

Exam 15: Annuities

Which of the following does not influence how an insurer calculates monthly annuity benefits?

Correct AnswerverifiedShow Answer

The main purpose of an annuity is to protect against:

Correct AnswerverifiedShow Answer

Explain how an annuity,10 years certain would work.

Correct AnswerverifiedAn annuity 10 years certain would pay re...View AnswerShow Answer

Choose the recipient of the largest dollar amount of annual annuity receipts for a $100,000 single-premium immediate annuity:

Correct AnswerverifiedShow Answer

A cash refund annuity would have lower monthly benefits per $1,000 of premium than an installment refund annuity.

Correct AnswerverifiedShow Answer

Why do insurers use a different mortality table for annuity benefit calculations than they use for life insurance premium calculations?

Correct AnswerverifiedShow Answer

The variable annuity:

Correct AnswerverifiedShow Answer

In an annuity the risk of dying too soon is transferred to the insurer.

Correct AnswerverifiedShow Answer

An annuity 5 years certain pays for 5 years or the death of the annuitant,whichever comes first.

Correct AnswerverifiedShow Answer

Life income annuities could be beneficial to all of the following persons except:

Correct AnswerverifiedShow Answer

A life annuity that pays nothing to the beneficiary after the annuitant dies is called a __________ annuity.

Correct AnswerverifiedShow Answer

Ron Liven is a retiree receiving a monthly annuity payment. This year his annuity payment is $4,000 per month. Last year,it was $3,700 per month,and the year before it was $3,500. Ron does NOT know what his payment will be NEXT year. What type of annuity does he have?

Correct AnswerverifiedShow Answer

Fixed dollar annuities are widely used as a hedge against inflation.

Correct AnswerverifiedFalse

Oprah has $250,000 and wishes to purchase a single-premium annuity. All other things being equal,which of the following annuities will provide her with the smallest monthly liquidation payment?

Correct AnswerverifiedShow Answer

It is not possible to have a level premium,immediate annuity.

Correct AnswerverifiedTrue

Assume you are analyzing two separate annuity pools. Pool A has significantly higher mortality (deaths/thousand) than Pool B. Holding other factors constant,which pool will make higher payments per month to each annuitant?

Correct AnswerverifiedA

A joint-and-one-half survivor annuity covers two people,but the annuity payments are cut in half at the death of the first annuitant.

Correct AnswerverifiedShow Answer

Explain briefly how annuity distributions are taxed.

Correct AnswerverifiedWhen distributions occur out of an annui...View AnswerShow Answer

A life annuity that pays nothing after the annuitant's death is a _______________ annuity.

Correct AnswerverifiedShow Answer

Which annuity provides for a built-in reduction of monthly payments after a specified event occurs?

Correct AnswerverifiedShow Answer

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An annuity 10 years certain would pay re...
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False

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True

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A

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When distributions occur out of an annui...
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