Question 1

An immediate life annuity offers all of the following benefits EXCEPT

Accepted Answer

A)  Immediate annuity payments are entirely exempt from federal income tax. 
B)  Simplicity for the purchaser as he or she does not have to manage investment funds. 
C)  Security for the purchaser as stable lifetime income that cannot be outlived is provided. 
D)  The principal is safe as the funds are guaranteed by the assets of the insurer. 
A)  Immediate annuity payments are entirely exempt from federal income tax. 
B)  Simplicity for the purchaser as he or she does not have to manage investment funds. 
C)  Security for the purchaser as stable lifetime income that cannot be outlived is provided. 
D)  The principal is safe as the funds are guaranteed by the assets of the insurer.

Question 2

Under an equity-indexed annuity, what name is given to the percentage increase in the stock index that is credited to the contract?

Accepted Answer

A)  the expense rate 
B)  the exclusion ratio 
C)  the indexing method 
D)  the participation rate 
A)  the expense rate 
B)  the exclusion ratio 
C)  the indexing method 
D)  the participation rate

Question 3

Which of the following statements regarding individual retirement accounts (IRAs) is (are) true?
I.If an individual's only income during the year is from investments, he or she cannot make an IRA contribution.
II.The funds in the IRA can be used to purchase life insurance on the owner.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 4

Which of the following statements is (are) true with regard to Roth IRAs?
I.The portion of a Roth IRA distribution that is attributable to investment income is taxable.
II.There is a maximum income level above which Roth IRA contributions are not allowed.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 5

James is concerned that if he purchases a fixed immediate annuity his funds will be tied-up and not accessible if an emergency arises. His insurance agent said that a rider could be attached to his annuity to address this concern. The rider is a(n)

Accepted Answer

A)  partial cash withdrawal rider. 
B)  return of premium rider. 
C)  guaranteed purchase option rider. 
D)  waiver-of-premium rider. 
A)  partial cash withdrawal rider. 
B)  return of premium rider. 
C)  guaranteed purchase option rider. 
D)  waiver-of-premium rider.

Question 6

Which of the following statements is (are) true with regard to the inflation annuity option?
I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age.
II.Periodic payments to the annuitant are adjusted for inflation.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 7

Which of the following statements is true concerning traditional and Roth IRAs?

Accepted Answer

A)  The investment income portion of Roth IRA distributions must be reported as taxable income. 
B)  Roth IRA contributions are tax deductible. 
C)  There are minimum distribution requirements for traditional IRAs. 
D)  There are no limits on the tax deductibility of traditional IRA contributions once the account owner has reached age 50. 
A)  The investment income portion of Roth IRA distributions must be reported as taxable income. 
B)  Roth IRA contributions are tax deductible. 
C)  There are minimum distribution requirements for traditional IRAs. 
D)  There are no limits on the tax deductibility of traditional IRA contributions once the account owner has reached age 50.

Question 8

Which of the following statements is (are) true with respect to annuities?
I.Annuities are the opposite of life insurance.
II.The fundamental purpose of annuities is to replace lost income in case of premature death.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 9

Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). What is the exclusion ratio in this case?

Accepted Answer

A)  33.33 percent 
B)  40.00 percent 
C)  50.00 percent 
D)  66.67 percent 
A)  33.33 percent 
B)  40.00 percent 
C)  50.00 percent 
D)  66.67 percent

Question 10

Which of the following is a characteristic of a longevity annuity (longevity insurance)?

Accepted Answer

A)  payment of the face value of the policy at age 100 
B)  forfeiture of the purchase price if the annuitant dies during the deferral period 
C)  cash value can be borrowed or recouped through a nonforfeiture option 
D)  high-cost annuity compared to other life annuities 
A)  payment of the face value of the policy at age 100 
B)  forfeiture of the purchase price if the annuitant dies during the deferral period 
C)  cash value can be borrowed or recouped through a nonforfeiture option 
D)  high-cost annuity compared to other life annuities

An immediate life annuity offers all of the following benefits EXCEPT

Under an equity-indexed annuity, what name is given to the percentage increase in the stock index that is credited to the contract?

Which of the following statements regarding individual retirement accounts (IRAs) is (are) true? I.If an individual's only income during the year is from investments, he or she cannot make an IRA contribution. II.The funds in the IRA can be used to purchase life insurance on the owner.

Which of the following statements is (are) true with regard to Roth IRAs? I.The portion of a Roth IRA distribution that is attributable to investment income is taxable. II.There is a maximum income level above which Roth IRA contributions are not allowed.

James is concerned that if he purchases a fixed immediate annuity his funds will be tied-up and not accessible if an emergency arises. His insurance agent said that a rider could be attached to his annuity to address this concern. The rider is a(n)

Which of the following statements is (are) true with regard to the inflation annuity option? I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age. II.Periodic payments to the annuitant are adjusted for inflation.

Which of the following statements is true concerning traditional and Roth IRAs?

Which of the following statements is (are) true with respect to annuities? I.Annuities are the opposite of life insurance. II.The fundamental purpose of annuities is to replace lost income in case of premature death.

Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). What is the exclusion ratio in this case?

Which of the following is a characteristic of a longevity annuity (longevity insurance)?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance

Auto Insurance (continued)

Homeowners Insurance, Section I

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

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Exam 14: Annuities and Individual Retirement Accounts

An immediate life annuity offers all of the following benefits EXCEPT

Under an equity-indexed annuity, what name is given to the percentage increase in the stock index that is credited to the contract?

Which of the following statements regarding individual retirement accounts (IRAs) is (are) true? I.If an individual's only income during the year is from investments, he or she cannot make an IRA contribution. II.The funds in the IRA can be used to purchase life insurance on the owner.

Which of the following statements is (are) true with regard to Roth IRAs? I.The portion of a Roth IRA distribution that is attributable to investment income is taxable. II.There is a maximum income level above which Roth IRA contributions are not allowed.

James is concerned that if he purchases a fixed immediate annuity his funds will be tied-up and not accessible if an emergency arises. His insurance agent said that a rider could be attached to his annuity to address this concern. The rider is a(n)

Which of the following statements is (are) true with regard to the inflation annuity option? I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age. II.Periodic payments to the annuitant are adjusted for inflation.

Which of the following statements is true concerning traditional and Roth IRAs?

Which of the following statements is (are) true with respect to annuities? I.Annuities are the opposite of life insurance. II.The fundamental purpose of annuities is to replace lost income in case of premature death.

Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). What is the exclusion ratio in this case?

Which of the following is a characteristic of a longevity annuity (longevity insurance)?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance

Auto Insurance (continued)

Homeowners Insurance, Section I

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

Filters