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Annuities Part 1 FINAL EXAM (GA 47308) Copy

Posted on 01.03.19

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Question 1 of 50

1. Question
How have annuities maintained an advantage over other forms of investing?
- They are never tax deferred.
- They all offer reliable rates of return.
- The interest earned is tax deferred.
- They all have simple, single premium plans.
Question 2 of 50

2. Question
Flexible premiums are more likely to be associated with which type of annuity?
- Fixed annuities
- Single premium annuities
- Equity index annuities
- Variable annuities
Question 3 of 50

3. Question
Which of the following describes the role of the annuitant?
- The individual on whose life the annuity is based
- The individual with investment control over the annuity
- The individual that facilitates between the owner and the insurer
- The company that rates the reliability of insurance companies
Question 4 of 50

4. Question
What is the maximum age for annuitants required by all insurance companies?
- 65 years old
- 85 years old
- The maximum age must be between 65 and 85 years of age.
- There is no universal maximum age.
Question 5 of 50

5. Question
What is the term “annuity” used to describe, besides the contract itself?
- The owner of the contract.
- The income that the individual receives under the contract.
- The individual on whose life the contract is based.
- The amount that the contract owner invests in the contract.
Question 6 of 50

6. Question
Which clients are not allowed to cancel annuities under a Free-Look Provision?
- Clients under 60 that do so within 30 days
- Clients over 60 that do so within 30 days
- Clients that wait longer that 30 days.
- All clients that do so within 30 days.
Question 7 of 50

7. Question
Surrender charges are typically used for which kinds of withdrawals?
- Withdrawals that exceed the free withdrawal privilege.
- All withdrawals starting immediately after the annuity transaction.
- All withdrawals after an initial year-long waiting period.
- None of the withdrawals typically require a surrender charge.
Question 8 of 50

8. Question
Settlement options refer to what aspect of an annuity contract?
- How the fund will be distributed
- How the investments will be made
- How the premiums will be organized
- How the surrender charges will be calculated
Question 9 of 50

9. Question
In owner-driven annuity contracts, benefits are based on which of the following happening?
- The death, and only the death, of the annuitant.
- The annuitant's death, disability, or the annuitant reaching a certain age.
- The annuity owner's death, disability, or the owner reaching a certain age.
- The owner's investment reaching a certain benchmark.
Question 10 of 50

10. Question
Equity Index Annuity contracts are named for what specific reason?
- They are categorized by insurance rating companies.
- Current or excess interest is paid in the form of participation in the equity index.
- They have a variety of sub-accounts that allow the contract owner to diversify their investments.
- They offer a reliable rate of return.
Question 11 of 50

11. Question
What is true of all annuity policy contracts?
- They all agree to pay the insured a regular income over a period of years.
- They all have a single premium and offer a reliable rate of return.
- The all have flexible premium options and no surrender charges.
- They all have interest rates or benefits that are linked to an equity index.
Question 12 of 50

12. Question
Historically, which of the following was part of the appeal of annuities?
- They offered a guaranteed annual income after the insured retired, but only for a certain number of years.
- They created an estate immediately upon the insured's death.
- Historically, annuities were not appealing and only rose to prominence very recently.
- They offered a guaranteed annual income after the insured retired, no matter how long they lived.
Question 13 of 50

13. Question
In a variable annuity contract, the insurer agrees to make periodic payments when?
- When they decide that it is advantageous for them to do so.
- When the insured decides it is advantageous for them to do so.
- Either immediately, or at some future, pre-decided, date.
- Immediately, and they must continue to do so as long as the insurer is still living.
Question 14 of 50

14. Question
Variable annuities operate under the premise that not everyone needs what?
- Money or possessions of any kind
- A set or fixed rate of return
- Uncertainty or unreliability when it comes to their investments
- Multiple payment or payout options
Question 15 of 50

15. Question
What do fixed annuities offer?
- A guaranteed interest rate for a set period of time
- A guaranteed interest rate for as long as the insured is living
- The most growth and highest payouts of all annuity types
- Advantages similar to mutual funds
Question 16 of 50

16. Question
Though equity-indexed annuities are thought of as their own annuity type, they are closely related to which other annuity type?
- Variable annuities
- Fixed annuities
- Single premium annuities
- Immediate benefit annuities
Question 17 of 50

17. Question
Single premiums are more likely to be associated with which annuity type?
- Variable annuities
- Immediate benefit annuities
- Fixed annuities
- Equity index annuities
Question 18 of 50

18. Question
Which of these answers are annuity benefit options?
- Single and Flexible
- Variable and Fixed
- Immediate and Deferred
- Free-Look and Surrender
Question 19 of 50

19. Question
Which of the follow is not a way to describe how the insured will receive annuity income payments?
- Straight life annuity
- Annuity unknown annuity
- Variable life annuity
- Annuity certain annuity
Question 20 of 50

20. Question
Which of the following is not directly a part of the annuity transaction?
- The insurance rating company
- The annuity owner
- The annuitant
- The insurer
Question 21 of 50

21. Question
Which of the following describes the person or trustee with investment control over the annuity contract?
- The annuitant
- The annuity owner
- The agent
- The insurer
Question 22 of 50

22. Question
In annuitant-driven annuity contracts, benefits are based on which of the following?
- The death, and only the death, of the annuity owner
- The annuity owner's death, disability, or the owner reaching a certain age
- The annuitant's investment reaching a certain point
- The annuitant's death, disability, or the annuitant reaching a certain age
Question 23 of 50

23. Question
Which of the following is not a part of structuring an annuity correctly?
- Maximizing payout options
- Minimizing taxes
- Minimizing payout options
- Minimizing penalties
Question 24 of 50

24. Question
What is the best way for an agent to ensure that they will not be caught in a badly titled annuity contract?
- Check with the insurer that all parties are in their intended roles
- Obtaining a letter of instruction from the client's attorney on how to structure the contract
- Obtain a letter of instruction from an outside rating company on how to structure the contract
- Check with the annuity owner that all parties are in their intended roles
Question 25 of 50

25. Question
Which of the following describes the person, persons, or trust that receives the annuity in the event of the death of the annuitant?
- The annuity owner
- The beneficiary
- The insurer
- The agent
Question 26 of 50

26. Question
Which plans do not contain Free-Look Provisions?
- Variable annuity contracts
- Owner-driven annuity contracts
- Single premium annuity contracts
- Annuity contracts sold through group plans
Question 27 of 50

27. Question
In the opinion of this lesson, which party involved with the annuity transaction is most responsible for discovering the solvency of insurers?
- The insurer
- The annuity owner
- The agent
- The beneficiary
Question 28 of 50

28. Question
In the opinion of this lesson, how many insurance rating services should an agent consult before vouching for an insurance companies solvency?
- One is usually enough, any more is overkill
- At least three, if they are all consistent, it bodes well for the company
- Two ratings is enough to allow an agent to compare numbers, which means it is enough
- An agent must consult all of the rating services before telling a client
Question 29 of 50

29. Question
What is the agent’s role during an annuity transaction?
- Selecting a company and a product and facilitating between the owner, annuitant, and insurance company
- Taking investment control over the annuity contract
- Rating insurance companies and supplying those ratings to your clients so they can make informed decisions
- Deciding when an where the annuity will be invested to maximize interest rates
Question 30 of 50

30. Question
The length of time the client is willing to commit their money has a direct effect on which aspect of an annuity?
- The type of annuity the client selects
- The provisions the client is allowed to select
- The administrative fees and charges the client has to pay
- The interest the client receives or is credited
Question 31 of 50

31. Question
Which of the follow is an example of a waiver found in an annuity contract?
- Death Waiver
- Terminal Illness Waiver
- All listed answers are correct
- Nursing home waiver
Question 32 of 50

32. Question
What do waivers in annuity contracts usually trigger in crisis situations?
- Higher interest rates
- Lower surrender rates
- Lower interest rates
- More administrative charges
Question 33 of 50

33. Question
Which of the following is not a settlement option?
- Single Lump Sum
- Variable
- Designated Dollar
- Interest-Only
Question 34 of 50

34. Question
What does the life income option offer?
- A single lump sum payout
- A specified dollar amount over a number of years
- Payments until the annuitant dies
- Interest only payments until another payment option takes effect
Question 35 of 50

35. Question
Which of the following is not a form of the life income option that was discussed in this course?
- Straight life option
- Period Certain Option
- Refund Life Option
- Indexed option
Question 36 of 50

36. Question
What percentage of each payment received through a settlement plan is taxable?
- 75%
- 0%
- 100%
- 50-100%
Question 37 of 50

37. Question
Who developed the market value adjustment (MVA) to adjust yields when interest rates were changing rapidly?
- An upset annuity owner seeking to get higher interest rates
- Insurers
- Insurance rating companies
- The Internal Revenue Service
Question 38 of 50

38. Question
What do fixed rate annuity contracts offer that other annuity contracts do not?
- The highest rate of return
- A rate of return determined by an equity index
- The most reliable rate of return
- The lowest rate of return
Question 39 of 50

39. Question
Do most fixed rate annuities have any associated fees?
- No, fixed rate annuities have no associated fees.
- Yes, fixed rate annuities have some annual administrative fees.
- The fees associated with a fixed rate annuity vary widely and are hard to categorize.
- Other than surrender charges, most fixed rate annuities have no associated charges or fees.
Question 40 of 50

40. Question
What kind of returns do fixed rate annuity contracts offer?
- A guaranteed return for the length of the annuitants life
- A minimum and maximum return, but nothing specific
- A set return for a specified period of time
- A set return for an unspecified period of time
Question 41 of 50

41. Question
Which of the following is not an example of a fixed rate annuity contract?
- Portfolio rate annuities
- All the answers listed are examples of fixed rate annuity contracts
- New money annuity contract
- Two tier annuity contract
Question 42 of 50

42. Question
While fixed rate annuity contracts are often compared to CDs, variable rate annuity contracts are often compared to what?
- Mutual funds
- CDs
- Equity index annuity contracts
- None of the answers listed here
Question 43 of 50

43. Question
Do variable annuity contracts typically have charges and fees?
- No, variable rate annuities have no associated fees.
- Yes, each variable annuity contract has its own schedule of fees that should be considered.
- Other than surrender fees, most variable rate annuities have no associated fees.
- Yes, all variable annuity contracts have an annual $50 administrative fee.
Question 44 of 50

44. Question
The initial objective of variable annuities was to combine which two things?
- The interest rates of CDs with the reliability of mutual funds
- The reliability of CDs with the guaranteed features of annuities
- The guaranteed features of annuities with the growth possibilities of equities
- The grown possibilities of equities with the interest rates of CDs
Question 45 of 50

45. Question
What are the risks associated with variable annuities?
- The solvency of the insurance company
- The fluctuating nature of the investments
- Variable annuity contracts are risk-free investments
- Both the solvency of the insurance company and the investment's fluctuating nature
Question 46 of 50

46. Question
Which type of investor would be most comfortable with a company-managed variable annuity contract?
- An investor with a moderate amount of investment experience that wants some control over their investments
- An investor with a great deal of investment experience that wants to select various investment sub-accounts with different goals
- An investor with little to no experience who wants the insurance company investment managers to manage the annuity
- It is unlikely that any individual would be comfortable with a company-managed variable annuity contract
Question 47 of 50

47. Question
Which type of investor would be most comfortable with a self-directed variable annuity contract?
- An investor with a moderate amount of investment experience that wants some control over their investments
- An investor with a great deal of investment experience that wants to select various investment sub-accounts with different goals
- An investor with little to no experience who wants the insurance company investment managers to manage the annuity
- It is unlikely that any individual would be comfortable with a company-managed variable annuity contract
Question 48 of 50

48. Question
Self-direct variable annuity contracts are great for investment-savvy clients for what reason?
- They allow the contract owner to alter the investment of funds as their investment objectives change.
- They allow the contract owner to set their own interest rate.
- They allow the contract owner to withdrawal amounts over the withdrawal privilege amount without penalty.
- Self-directed variable annuity contracts are not great for investment-savvy clients.
Question 49 of 50

49. Question
For the purpose of equity indexed annuity contracts, using an index’s average value instead of its value on specific dates is known as what?
- Point-to-point
- High-water mark
- Annual reset
- Monthly averaging
Question 50 of 50

50. Question
Which of the following is not a design used to calculate interest rates in equity indexed annuity contracts?
- High-water mark
- Straight life
- Point-to-point
- Annual reset

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