#1
What is an annuity?
A series of equal payments made at regular intervals
ExplanationRegular payments at intervals.
#2
What is the key characteristic of a fixed annuity?
The payment amount is fixed for the duration of the annuity
ExplanationFixed payment amount throughout.
#3
What is the key advantage of a deferred annuity?
Tax-deferred growth
ExplanationGrowth without immediate tax.
#4
Which of the following statements about immediate annuities is true?
Payments begin immediately upon purchasing the annuity
ExplanationImmediate payment upon purchase.
#5
What is the purpose of a surrender period in an annuity contract?
To limit the annuitant's access to funds for a specified time
ExplanationRestricts access for a period.
#6
Which of the following is a characteristic of an indexed annuity?
Interest credited based on a market index
ExplanationInterest linked to market index.
#7
What is the annuity accumulation phase?
The period during which the annuity's value grows through contributions and investment returns
ExplanationPhase of value accumulation.
#8
What is a surrender charge in relation to annuities?
A fee charged for withdrawing money from an annuity early
ExplanationFee for early withdrawal.
#9
What is the main purpose of a death benefit rider in an annuity contract?
To provide a lump-sum payment to the beneficiary upon the annuitant's death
ExplanationLump-sum to beneficiary on death.
#10
What is the purpose of a cost-of-living adjustment (COLA) rider in an annuity?
To adjust the annuity payments to keep pace with inflation
ExplanationAdjust payments for inflation.
#11
Which of the following is NOT a factor affecting the annuity payout amount?
Credit score of the annuitant
ExplanationCredit score doesn't affect payout.
#12
What does the term 'annuity certain' refer to?
An annuity that provides income for a fixed period, regardless of the annuitant's lifespan
ExplanationFixed income period.
#13
What is the primary risk associated with a variable annuity?
Market risk
ExplanationRisk from market fluctuations.
#14
What does the term 'annuitant' refer to in an annuity contract?
The person whose life expectancy is used to calculate annuity payouts
ExplanationPerson for payout calculations.
#15
What does the annuitization phase of an annuity involve?
The process of converting the annuity's accumulated value into a stream of income payments
ExplanationConverting value into income.
#16
What is the primary difference between a fixed annuity and a variable annuity?
The investment options available
ExplanationDifference in investment choices.
#17
In an immediate annuity, what happens to the remaining balance upon the annuitant's death?
It is forfeited to the insurance company
ExplanationBalance goes to the insurer.
#18
What is the purpose of a fixed-period annuity payout option?
To provide income for a specified period, regardless of the annuitant's lifespan
ExplanationIncome for fixed period.
#19
What is a variable annuity's main advantage over a fixed annuity?
Flexibility to invest in different subaccounts
ExplanationVariety in investment choices.