Question 1

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.E) All of the above
F) C) and D)

Question 2

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 IIE) None of the above
F) C) and D)

Question 3

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 IIE) B) and D)
F) A) and B)

Question 4

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 IIE) B) and D)
F) All of the above

Question 5

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 rateE) A) and D)
F) A) and C)

Question 6

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 percentE) A) and D)
F) A) and C)

Question 7

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 IIE) None of the above
F) C) and D)

Question 8

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.E) None of the above
F) A) and B)

Question 9

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.E) B) and D)
F) All of the above

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 annuitiesE) A) and B)
F) A) and D)

Exam 14: Annuities and Individual Retirement Accounts

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)

Correct Answer
verified

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.

Correct Answer
verified

An immediate life annuity offers all of the following benefits EXCEPT

Correct Answer
verified

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.

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

Exam 14: Annuities and Individual Retirement Accounts

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)

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

An immediate life annuity offers all of the following benefits EXCEPT

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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