#1
Which of the following best defines an annuity?
A one-time lump sum payment
A series of periodic payments
A type of insurance policy
A variable investment fund
#2
How does a life annuity differ from a term certain annuity?
Life annuity provides payments for a specified term, while term certain annuity provides lifelong payments
Life annuity provides lifelong payments, while term certain annuity provides payments for a specified term
Both types provide payments for a specified term
Neither type provides periodic payments
#3
How does the surrender charge in an annuity contract affect early withdrawals?
It encourages early withdrawals by reducing penalties
It discourages early withdrawals by imposing penalties
It has no impact on early withdrawals
It guarantees tax-free withdrawals
#4
In a fixed annuity, how are interest rates typically determined?
Linked to market performance
Fixed at the time of purchase
Fluctuate based on government regulations
Dependent on the annuitant's age
#5
What is the primary advantage of a variable annuity over a fixed annuity?
Guaranteed returns
Flexibility in investment choices and potential for higher returns
Fixed periodic payments
No market risk
#6
What is the key characteristic of a fixed annuity?
Returns are tied to market performance
Guaranteed periodic payments
No periodic payments
Variable interest rates
#7
In a deferred annuity, when do the payments typically begin?
Immediately upon purchase
After a specified waiting period
Only after the annuitant's death
During the accumulation phase
#8
What distinguishes a variable annuity from other types of annuities?
Guaranteed returns
Investment choices and market performance impact returns
Fixed periodic payments
No tax implications
#9
In the context of annuities, what does the term 'annuitization' refer to?
The purchase of an annuity
The conversion of the annuity's value into a stream of periodic payments
The termination of annuity contracts
Adjusting interest rates in variable annuities
#10
Which of the following is a potential disadvantage of a fixed annuity?
Guaranteed returns
Risk of inflation eroding purchasing power
Flexibility in investment choices
Tax-free withdrawals
#11
What role does the annuitization phase play in the lifecycle of an annuity?
It signifies the end of the annuity contract
It allows the annuitant to withdraw funds at any time
It converts the accumulated value into a stream of periodic payments
It determines the surrender value of the annuity
#12
What is the main advantage of a joint and survivor annuity?
Higher periodic payments
Lifetime income for multiple beneficiaries
No waiting period
Fixed interest rates
#13
Which factor is typically considered in determining annuity payments?
Annuity holder's age
Market volatility
Currency exchange rates
Government regulations
#14
Which type of annuity allows the annuitant to participate in potential market gains?
Immediate annuity
Fixed annuity
Deferred annuity with a fixed interest rate
Variable annuity
#15
What is the surrender period in an annuity contract?
The period during which the annuity holder can surrender the contract without penalties
The period when annuity payments are made
The period when market returns are volatile
The period when the annuitant is deceased
#16
In a variable annuity, what is the purpose of the death benefit rider?
Guarantees a minimum death benefit to the beneficiary
Increases periodic payments to the annuitant
Eliminates the surrender period
Provides tax-free withdrawals
#17
What distinguishes a qualified annuity from a non-qualified annuity?
Qualified annuities are purchased with pre-tax dollars, while non-qualified annuities are purchased with after-tax dollars
Qualified annuities have lower returns than non-qualified annuities
Non-qualified annuities are subject to higher taxes
There is no difference between the two