Annuity – WebCE (WebCE GA Annuity) questions with complete solutions

Annuitization is CORRECT ANSWERS: Accumulated values are converted into a stream of periodic income payments. How often can payments of annuities be paid out? CORRECT ANSWERS: A specified term of years, for life, or a combination of the two. What is the reason (how has a consumer's priorities and needs shifted) that annuities are well suited for late-life retirement planning? CORRECT ANSWERS: When a consumer priorities and needs typically shift from asset accumulation to income distribution What is the start date range for deferred income annuities? CORRECT ANSWERS: Anywhere from 13 months to 40 years in the future. What is the age that Deferred Income Annuities' income start date cannot extend past? CORRECT ANSWERS: 85 years old. What are Surrender Charges? CORRECT ANSWERS: Fees the insurer assess for early withdrawals or contract surrenders. What is a Withdrawal Fee? CORRECT ANSWERS: when less than the full contract value is taken. What are the two approaches for insurers to determine the surrender charge? What are other ways? CORRECT ANSWERS: 1) Account Value Method 2) Premium Deposit Method 3) Market Value Adjustments 4) Premium Tax What is the Premium Deposit Method of determining the surrender charge? CORRECT ANSWERS: The charge on the amount of the contract's invested premium, applying a percentage that usually declines annually over the surrender charge period. What is the Account Value Method of determining the surrender charge? CORRECT ANSWERS: Assess a surrender charge equal to some percentage of the contract's accumulated value. What is Premium Tax in relation to the annuity? CORRECT ANSWERS: A number of states impose a tax on annuity premiums. What does the Mortality and Expense (M&E) charge? CORRECT ANSWERS: Assessed against the values of the separate subaccounts and is deducted before accumulation unit values are calculated.