#1
What is an annuity?
A type of loan
A financial product designed to provide a stream of income
A type of insurance policy
A real estate investment
#2
Which of the following is a typical payout option for an annuity?
Lump-sum payment
Single premium payment
Annual premium payment
Quarterly premium payment
#3
Which entity typically guarantees the payments of an annuity?
The annuitant
The annuity issuer
The government
The annuity broker
#4
What is the purpose of the accumulation phase in an annuity?
To receive periodic payments from the annuity
To accumulate funds and grow the investment
To withdraw funds from the annuity
To determine the annuitant's life expectancy
#5
Which of the following is NOT a characteristic of annuities?
Tax-deferred growth
Guaranteed lifetime income
High liquidity
Death benefit
#6
What is the surrender period in an annuity contract?
The period during which the annuitant receives payments
The period during which the annuitant can cancel the contract without penalty
The period during which the annuity issuer can cancel the contract
The period during which the annuity matures
#7
Which type of annuity provides payments for a specified period, such as 10 or 20 years?
Immediate annuity
Deferred annuity
Fixed annuity
Period certain annuity
#8
What is the key characteristic of a deferred annuity?
Immediate payment of income
No accumulation phase
Postponed payment of income
Fixed interest rate
#9
What does the term 'annuitization' refer to in the context of annuities?
The process of converting a lump sum into a series of periodic payments
The process of investing in stocks within an annuity
The process of annuity issuance by an insurance company
The process of annuity cancellation
#10
What is the primary purpose of a death benefit in an annuity?
To provide income for the annuitant's heirs upon death
To reduce taxes on annuity payments
To provide guaranteed returns
To increase the annuity's surrender value
#11
Which of the following is a characteristic of an immediate annuity?
Payments begin immediately after purchase
Payments are deferred for a specified period
Payments are made only upon the death of the annuitant
Payments vary based on market performance
#12
What is the main advantage of a fixed annuity compared to a variable annuity?
Higher potential returns
Guaranteed minimum interest rate
Flexibility in investment options
No surrender charges
#13
Which of the following statements is true regarding fixed-indexed annuities?
They offer a guaranteed fixed interest rate
They provide returns linked to the performance of a stock market index
They have no surrender charges
They are always issued by government agencies
#14
Which of the following is an advantage of a variable annuity?
Guaranteed minimum interest rate
No market exposure
Flexibility in investment options
Fixed income payments
#15
What is the primary difference between a fixed annuity and a variable annuity?
Fixed annuities offer guaranteed returns, while variable annuities do not.
Variable annuities offer guaranteed returns, while fixed annuities do not.
Fixed annuities allow the annuitant to choose their investment options, while variable annuities do not.
Variable annuities provide fixed interest rates, while fixed annuities provide variable rates.
#16
In what way does a joint and survivor annuity differ from a single-life annuity?
A joint and survivor annuity provides payments to multiple beneficiaries, while a single-life annuity provides payments to only one person.
A joint and survivor annuity guarantees a higher payout than a single-life annuity.
A joint and survivor annuity provides payments for a fixed term, while a single-life annuity provides payments for life.
A joint and survivor annuity allows the annuitant to change beneficiaries, while a single-life annuity does not.
#17
What is the purpose of a cost-of-living adjustment (COLA) rider in an annuity?
To increase the annuity's surrender value
To provide protection against inflation by adjusting payments based on changes in the cost of living
To offer flexibility in investment options
To provide a death benefit to the annuitant's heirs
#18
What happens to the annuity payments upon the death of the annuitant in a life-only annuity?
Payments continue to the beneficiary
Payments stop
Payments are reduced by half
Payments are doubled