LOMA 281 - Chapter 10

1.        By definition, the person whose lifetime the insurer uses to determine the amount and duration of annuity payments under the contract is known as the

• (1)   payee
• (2)   annuitant
• (3)   contract owner
• (4)   beneficiary

2.        Saida Ahmed purchased an annuity on February 1, 2015. Under the terms of the contract, the insurer will begin making annual annuity payments to Ms. Ahmed on February 1, 2035. With regard to the contract’s annuity start date and annuity period, it is correct to say that Ms. Ahmed’s contract has an annuity start date of

• (1)   February 1, 2015, and the contract’s annuity period is one year
• (2)   February 1, 2015, and the contract’s annuity period is twenty years
• (3)   February 1, 2035, and the contract’s annuity period is one year
• (4)   February 1, 2035, and the contract’s annuity period is twenty years

3.        An annuity contract can be classified as either an immediate annuity or a deferred annuity. An annuity under which the annuity payments are postponed for at least one year after the annuity is purchased is (an immediate / a deferred) annuity. For this type of annuity contract, the period between the contract owner’s purchase of the annuity and either the date when the annuity’s payout period begins or the date when the annuity is terminated is known as the annuity contract’s (accumulation / liquidation) period.

• (1)   an immediate / accumulation
• (2)   an immediate / liquidation
• (3)   a deferred / accumulation
• (4)   a deferred / liquidation

4.        Raji Singh, age 58, inherited $300,000 from his father’s estate. Mr. Singh used the entire inheritance as a lump-sum premium payment to purchase an annuity contract that will provide him with monthly annuity payments, beginning on his 65th birthday. This information indicates that Mr. Singh purchased a

• (1)   single-premium deferred annuity
• (2)   single-premium immediate annuity
• (3)   flexible-premium deferred annuity
• (4)   flexible-premium immediate annuity

6.        A variable annuity is an annuity under which the amount of any accumulated value and the amount of the annuity payments fluctuate in accordance with the performance of one or more specified investment funds. The following statements are about variable annuities. Select the answer choice containing the correct statement.

• (1)   Federal laws in the United States treat variable annuities as securities that must comply with federal securities laws.
• (2)   An insurer that issues a variable annuity must guarantee that the contract’s accumulated value will experience no loss of principal and will earn at least a minimum guaranteed interest rate.
• (3)   Once the contract owner of a variable annuity allocates premium amounts among a number of subaccounts, she cannot change the subaccounts in which future premiums are invested.
• (4)   If the contract owner of a variable annuity allocates premiums among a number of subaccounts, she generally cannot change the percentage of money allocated to specific subaccounts.

7.        Lance Naisbitt paid a $100,000 single premium for a variable deferred annuity from the Willow Insurance Company. He chose to invest his premium payment in three subaccounts, as follows: ·    50% in Subaccount A; ·    30% in Subaccount B; ·    20% in Subaccount C; At the time of purchase, accumulation units in these three subaccounts had the following values: Subaccount A: $25 per unit;    Subaccount B: $30 per unit;   Subaccount C: $40 per unit; With regard to Mr. Naisbitt’s investments in these three subaccounts, it is correct to say that Willow purchased for Mr. Naisbitt

• (1)   twice as many accumulation units in Subaccount A as it purchased for him in Subaccount B
• (2)   half as many accumulation units in Subaccount C as it purchased for him in Subaccount A
• (3)   1,000 accumulation units in Subaccount A
• (4)   2,000 accumulation units in Subaccount B

8.       Kara Garner, age 58, purchased a type of fixed annuity that will begin making annuity payments in 7 years when she plans to retire. This annuity locked in a guaranteed stream of income when Ms. Garner purchased it. This information indicates that Ms. Garner most likely purchased a

• (1)   market-value-adjusted (MVA) annuity
• (2)   fixed indexed annuity (FIA)
• (3)   longevity annuity
• (4)   deferred income annuity (DIA)

9.        Deferred annuity contract owners typically are allowed to take withdrawals from their contracts, although they may incur a surrender charge for doing so. The following statement(s) can correctly be made about withdrawals and surrender charges as they apply to deferred annuity contracts: A.   Fixed deferred annuities typically allow contract owners to withdraw up to 10 percent of the accumulated value per year, although a surrender charge applies to such withdrawals; B.   For deferred annuities, the amount of any surrender charge that an insurer imposes usually declines over time.

• (1)   Both A and B
• (2)   A only
• (3)   B only
• (4)   Neither A nor B