Life & Health Insurance Annuities and Retirement Plans Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
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Which annuity payout option provides income for the annuitant's lifetime but guarantees payments for a minimum period even if the annuitant dies early?
Answer: Life with period certain
A life with period certain annuity guarantees payments for a specified minimum period regardless of whether the annuitant survives that period.
What is the primary tax advantage of a traditional IRA contribution for an eligible individual?
Answer: Contributions may be tax-deductible
Eligible individuals may deduct traditional IRA contributions from taxable income, reducing their current tax liability.
An annuitant selects a joint and 50% survivor option. If the primary annuitant dies, what percentage of the original payment does the survivor receive?
Answer: 50%
Under a joint and 50% survivor option, the survivor receives exactly half of the original annuity payment after the primary annuitant's death.
Which of the following describes a SIMPLE IRA plan?
Answer: Requires employer matching contributions
SIMPLE IRAs require employers to either match employee contributions up to 3% of compensation or make a flat 2% nonelective contribution.
What term describes the risk that an annuitant will outlive their assets or income stream?
Answer: Longevity risk
Longevity risk is the risk of outliving one's financial resources, which annuities are specifically designed to mitigate.
In a 403(b) plan, which employees are typically eligible to participate?
Answer: Employees of public schools and tax-exempt organizations
403(b) plans are retirement savings plans available to employees of public educational institutions and 501(c)(3) tax-exempt organizations.
Which annuity feature allows the contract owner to withdraw a percentage of the account value each year without triggering surrender charges?
Answer: Free withdrawal provision
The free withdrawal provision typically allows the owner to withdraw up to 10% of the account value annually without incurring surrender charges.