Question

26. Describe the benefit provisions of a typical sick-leave plan.

27. Which of the following statements concerning a deferred annuity is (are) correct?

I. Deferred annuities must be purchased with periodic premiums paid over a period of time.

II. Because of the delay feature, a deferred annuity is unsuitable as a vehicle to accumulate a sum for old age.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

28. Which of the following statements concerning a joint-and-last survivor annuity is (are) correct?

I. It must be sold as an immediate annuity.

II. Annuity payments cease upon the first death of an annuitant.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

Answer 1

26. Typical sick-leave plan, allows the employees to take leaves during illness without being loss of pay.Every employer provides some fix sick leave day per year to every employee. Some employer base the number of sick leaves to be availed based on the designation of the employees too.Some employers allow sick leaves to be carried to next year, if not exhausted in current year.Since, sick leaves are paid leaves, employees do not worry about taking a leave and stay home, when they are sick as they will still get paid for that. This, in turn, prevents the disease to be spread among other employees. If sick leaves were not paid, then the employee, would try to come office even during illness, to prevent their loss and in turn make disease spread among other employees, that would be a great loss to the organization. This adds to the benefit provision of typical sick-leave plan.

27. Deferred annuities can get be purchased either as a single premium or can be purchased by multiple premiums. It is not necessary to be purchased into periodic premiums over a period of time and hence statement 1 is false.

Deferred annuities are actually purchased for saving that can be used at old stage and can guarantee life time income for the investor.After the annuity, investor gets the amount accumulated either in one time or in equal installment. Since it adds interest and gives tax free saving, it is actually a good investment vehicle for old age. Hence, statement 2 is also false.Hence,option D is right option.

28. joint-and-last survivor annuity is being paid to the investors after upon first death only and hence it cannot be sold as immediate annuity.Hence, statement 1 is wrong. Also, payments continues after the death of first annuitant and hence statement 2 is also incorrect.Hence, option D is correct.