©THESTAR 2024/2025 ALL RIGHTS RESERVED 10:31AM. A+
Primerica Life Insurance Chapter 5: Annuities
Exam Questions With Correct Answers 100%
Verified.
Deferred - Answer✔Withheld or postponed until a specified time or event in the future
IRS - Answer✔Internal Revenue Service: Responsible for tax collection and tax enforcement
Life Contingency - Answer✔Depended on whether or not the insured is alive
Liquidation of an estate - Answer✔converting a person's net worth into a cash flow
Qualified Plan - Answer✔A retirement plan that meets the IRS guidelines for receiving favorable
tax treatment
Suitability - Answer✔A requirement to determine if an insurance product or investment is
appropriate for a particular customer
What is life insurance purchased for and what are annuities purchased for - Answer✔Risk of
dying to soon, Risk of living too long
What is the difference between the mortality tables used for life insurance and annuities -
Answer✔The annuity table has a greater life expectancy that the table for the life insurance
What is an annuity - Answer✔To accumulate money in order to liquidate an estate
Who are the parties of an annuity - Answer✔The owner is the purchaser
The annuitant is the person who received that payments from the annuity, whose life
expectancy is taken into consideration, and for whom the annuity is written
The Beneficiary is the person who receives the annuity asses in case of the annuitant dying
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 10:31AM. A+
What is the accumulation period - Answer✔This is the pay in period and is the period of time
over which the owner makes payments into an annuity. These payments earn interest on a tax-
deferred basis
What is the annuity period - Answer✔The annuitization, liquidation, or payout period is the
time which the total annuity value is converted into a stream of income payments to the
annuitant
What 4 things is the annuity income amount based on? - Answer✔The cash value accumulated
The frequency of the payment
The interest rate
The annuitants age and gender
What does the beneficiary received if the annuitant dies during the accumulation period -
Answer✔The greater of either the cash value or the total premiums paid. If no beneficiary is
named this will be paid to the annuitants estate.
What are the 5 provisions that apply to annuities - Answer✔1.) Grace period
2.) Incontestability
3.) Entire contract
4.) Misstatement of age
5.) Free-look period
What are the 2 ways annuities can be funded - Answer✔1.) . Single payment or lump sum
2.) Periodic payments which can be either level premium (fixed installments) or flexible
premium (installment amount and frequency varies)
What are the 2 types of ways that annuuity payments begin - Answer✔1.) . Immediate annuity
that provides payments within one year from date of purchase
2.) Deferred annuity which the payments begin some time after one year
What are the types of annuities - Answer✔SP:IA . Single Premium : Immediate Annuity
SP:DA . Single Premium: Deferred Annuity
FP:DA . Flexible Premium: Deferred Annuity
What are the most common types of annuities and what are 2 unique attributes -
Answer✔FPDA's are most common.
They are not qualified plans nor are there any IRS limits to contributions
2
Primerica Life Insurance Chapter 5: Annuities
Exam Questions With Correct Answers 100%
Verified.
Deferred - Answer✔Withheld or postponed until a specified time or event in the future
IRS - Answer✔Internal Revenue Service: Responsible for tax collection and tax enforcement
Life Contingency - Answer✔Depended on whether or not the insured is alive
Liquidation of an estate - Answer✔converting a person's net worth into a cash flow
Qualified Plan - Answer✔A retirement plan that meets the IRS guidelines for receiving favorable
tax treatment
Suitability - Answer✔A requirement to determine if an insurance product or investment is
appropriate for a particular customer
What is life insurance purchased for and what are annuities purchased for - Answer✔Risk of
dying to soon, Risk of living too long
What is the difference between the mortality tables used for life insurance and annuities -
Answer✔The annuity table has a greater life expectancy that the table for the life insurance
What is an annuity - Answer✔To accumulate money in order to liquidate an estate
Who are the parties of an annuity - Answer✔The owner is the purchaser
The annuitant is the person who received that payments from the annuity, whose life
expectancy is taken into consideration, and for whom the annuity is written
The Beneficiary is the person who receives the annuity asses in case of the annuitant dying
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 10:31AM. A+
What is the accumulation period - Answer✔This is the pay in period and is the period of time
over which the owner makes payments into an annuity. These payments earn interest on a tax-
deferred basis
What is the annuity period - Answer✔The annuitization, liquidation, or payout period is the
time which the total annuity value is converted into a stream of income payments to the
annuitant
What 4 things is the annuity income amount based on? - Answer✔The cash value accumulated
The frequency of the payment
The interest rate
The annuitants age and gender
What does the beneficiary received if the annuitant dies during the accumulation period -
Answer✔The greater of either the cash value or the total premiums paid. If no beneficiary is
named this will be paid to the annuitants estate.
What are the 5 provisions that apply to annuities - Answer✔1.) Grace period
2.) Incontestability
3.) Entire contract
4.) Misstatement of age
5.) Free-look period
What are the 2 ways annuities can be funded - Answer✔1.) . Single payment or lump sum
2.) Periodic payments which can be either level premium (fixed installments) or flexible
premium (installment amount and frequency varies)
What are the 2 types of ways that annuuity payments begin - Answer✔1.) . Immediate annuity
that provides payments within one year from date of purchase
2.) Deferred annuity which the payments begin some time after one year
What are the types of annuities - Answer✔SP:IA . Single Premium : Immediate Annuity
SP:DA . Single Premium: Deferred Annuity
FP:DA . Flexible Premium: Deferred Annuity
What are the most common types of annuities and what are 2 unique attributes -
Answer✔FPDA's are most common.
They are not qualified plans nor are there any IRS limits to contributions
2
