Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

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)  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 4

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 
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 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

Explain how an annuity,10 years certain would work.

Accepted Answer

An annuity 10 years certain would pay re

Question 10

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. 
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 11

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

Question 12

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. 
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 13

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

Question 14

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 15

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 16

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 
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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

Explain briefly how annuity distributions are taxed.

Accepted Answer

When distributions occur out of an annui

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 15: Annuities

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

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

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?

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

The main purpose of an annuity is to protect against:

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?

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

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

Explain how an annuity,10 years certain would work.

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

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

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?

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

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.

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

The variable annuity:

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

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

Explain briefly how annuity distributions are taxed.

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

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

Insurance Contracts

Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Filters