#1
What is an annuity?
A series of equal periodic payments
ExplanationRegular payments made at consistent intervals.
#2
Which of the following is a characteristic of a fixed annuity?
Guaranteed fixed interest rate
ExplanationInterest rate remains constant throughout the annuity term.
#3
What is the key difference between an immediate annuity and a deferred annuity?
Deferred annuity starts payments right away
ExplanationPayments in a deferred annuity begin at a later date.
#4
What is the annuitization phase of an annuity?
The period when annuity payments start
ExplanationCommencement of regular payments to the annuitant.
#5
What is the primary advantage of a joint and survivor annuity?
Payments continue until the last annuitant's death
ExplanationEnsures payments persist as long as either annuitant is alive.
#6
What happens to the remaining value of a fixed annuity upon the annuitant's death?
It is paid to the beneficiary
ExplanationBeneficiary receives remaining funds upon annuitant's demise.
#7
What is the surrender period in an annuity contract?
The period during which withdrawals may result in a penalty
ExplanationTimeframe where withdrawing funds may incur charges.
#8
In a variable annuity, where are the funds typically invested?
Corporate stocks
ExplanationInvestments often include stocks of various corporations.
#9
Which type of annuity provides potential for increasing payments over time to combat inflation?
Indexed annuity
ExplanationPayments may rise based on an inflation index.
#10
In the context of annuities, what is a commutation rider?
A rider allowing early withdrawals without penalties
ExplanationProvision enabling penalty-free early withdrawals.
#11
What is a qualified annuity?
An annuity held in a retirement account with pre-tax dollars
ExplanationFunded with pre-tax income, often in a retirement account.