#1
What is an annuity?
A periodic series of payments
ExplanationProvides a series of regular payments over time.
#2
What is the role of the annuitant in an annuity contract?
Receiving annuity payments
ExplanationPrimary function is to receive annuity payments.
#3
What is the primary purpose of an annuity's surrender charge?
To discourage early withdrawals
ExplanationPenalty to deter early withdrawals.
#4
What is the main distinction between a qualified and a non-qualified annuity?
Tax treatment of contributions
ExplanationDiffer in the tax treatment of contributed funds.
#5
Which of the following is a feature of a fixed annuity?
Guaranteed interest rate
ExplanationEnsures a fixed interest rate on investments.
#6
What is the annuity payment period?
The time between each annuity payment
ExplanationDuration between consecutive payment intervals.
#7
What is the difference between a deferred annuity and an immediate annuity?
Immediate annuity starts payouts right away, while deferred annuity delays them
ExplanationTiming of payout initiation differs between the two.
#8
What is the primary purpose of an annuity's death benefit?
To pass assets to beneficiaries upon the annuitant's death
ExplanationFacilitates passing assets to beneficiaries after the annuitant's death.
#9
How are annuity payments taxed?
Taxed as ordinary income
ExplanationSubject to taxation as regular income.
#10
What is a rider in the context of an annuity?
An optional feature that can be added to customize the annuity
ExplanationCustomizable optional feature in the annuity contract.
#11
What is the surrender period in an annuity?
The time during which withdrawals may incur penalties
ExplanationDuration when early withdrawals may result in penalties.
#12
In an immediate annuity, when do payments typically begin?
Upon annuitization
ExplanationPayments commence immediately upon annuitization.
#13
Which party bears the investment risk in a fixed annuity?
Insurance company
ExplanationInvestment risk is assumed by the insurance company.
#14
What is the impact of annuitization on an annuity contract?
It converts the contract into a series of periodic payments
ExplanationTransforms the contract into regular payment series.
#15
In a variable annuity, what determines the investment performance and payout amount?
Performance of underlying investment options
ExplanationInvestment and payout are contingent on underlying options' performance.
#16
Which type of annuity provides the potential for higher returns but also higher risks?
Variable annuity
ExplanationOffers higher return potential with increased risk.