Annuity – WebCE Questions and Answers Rated A+ with
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Annuitization is -✔✔ Accumulated values are converted into a stream of periodic income
payments.
How often can payments of annuities be paid out? -✔✔ 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? -✔✔ When a consumer priorities and needs typically
shift from asset accumulation to income distribution
What is the start date range for deferred income annuities? -✔✔ Anywhere from 13 months to
40 years in the future.
What is the age that Deferred Income Annuities' income start date cannot extend past? -✔✔
85 years old.
What are Surrender Charges? -✔✔ Fees the insurer assess for early withdrawals or contract
surrenders.
What is a Withdrawal Fee? -✔✔ 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? -✔✔ 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? -✔✔ 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? -✔✔ Assess a
surrender charge equal to some percentage of the contract's accumulated value.
What is Premium Tax in relation to the annuity? -✔✔ A number of states impose a tax on
annuity premiums.
What does the Mortality and Expense (M&E) charge? -✔✔ Assessed against the values of the
separate subaccounts and is deducted before accumulation unit values are calculated.
It helps ensure that the insurer can meet its contractual obligations for annualized income
payments and a minimum death benefit.
The cost of a variable annuity's death benefit and annuity charge plus related insurer costs
(such as agent commissions and overhead)
Which expense of a Variable Annuity, which is the most criticized? And why? -✔✔ The
Mortality and Expense.
What fees are built into the Fixed Annuity Contract's interest rate? -✔✔ The Commissions it
pays to its producers and distributors, its operational costs and reserve requirements, and
generates profits.
1) Commissions
2) Operational costs
3) Profits
Latest updates
Annuitization is -✔✔ Accumulated values are converted into a stream of periodic income
payments.
How often can payments of annuities be paid out? -✔✔ 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? -✔✔ When a consumer priorities and needs typically
shift from asset accumulation to income distribution
What is the start date range for deferred income annuities? -✔✔ Anywhere from 13 months to
40 years in the future.
What is the age that Deferred Income Annuities' income start date cannot extend past? -✔✔
85 years old.
What are Surrender Charges? -✔✔ Fees the insurer assess for early withdrawals or contract
surrenders.
What is a Withdrawal Fee? -✔✔ 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? -✔✔ 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? -✔✔ 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? -✔✔ Assess a
surrender charge equal to some percentage of the contract's accumulated value.
What is Premium Tax in relation to the annuity? -✔✔ A number of states impose a tax on
annuity premiums.
What does the Mortality and Expense (M&E) charge? -✔✔ Assessed against the values of the
separate subaccounts and is deducted before accumulation unit values are calculated.
It helps ensure that the insurer can meet its contractual obligations for annualized income
payments and a minimum death benefit.
The cost of a variable annuity's death benefit and annuity charge plus related insurer costs
(such as agent commissions and overhead)
Which expense of a Variable Annuity, which is the most criticized? And why? -✔✔ The
Mortality and Expense.
What fees are built into the Fixed Annuity Contract's interest rate? -✔✔ The Commissions it
pays to its producers and distributors, its operational costs and reserve requirements, and
generates profits.
1) Commissions
2) Operational costs
3) Profits
