#1
What is an annuity?
A financial product designed to provide a stream of income
ExplanationProvides regular income
#2
Which of the following is a typical payout option for an annuity?
Lump-sum payment
ExplanationSingle large payment
#3
Which entity typically guarantees the payments of an annuity?
The annuity issuer
ExplanationIssuer guarantees payments
#4
What is the purpose of the accumulation phase in an annuity?
To accumulate funds and grow the investment
ExplanationFunds accumulation and growth
#5
Which of the following is NOT a characteristic of annuities?
High liquidity
ExplanationLacks high liquidity
#6
What is the surrender period in an annuity contract?
The period during which the annuitant can cancel the contract without penalty
ExplanationCancellation without penalty period
#7
Which type of annuity provides payments for a specified period, such as 10 or 20 years?
Period certain annuity
ExplanationPayments for a fixed period
#8
What is the key characteristic of a deferred annuity?
Postponed payment of income
ExplanationDelayed income payment
#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
ExplanationConversion to periodic payments
#10
What is the primary purpose of a death benefit in an annuity?
To provide income for the annuitant's heirs upon death
ExplanationIncome for heirs upon death
#11
Which of the following is a characteristic of an immediate annuity?
Payments begin immediately after purchase
ExplanationImmediate payment start
#12
What is the main advantage of a fixed annuity compared to a variable annuity?
Guaranteed minimum interest rate
ExplanationProvides guaranteed interest rate
#13
Which of the following statements is true regarding fixed-indexed annuities?
They provide returns linked to the performance of a stock market index
ExplanationReturns tied to stock market index
#14
Which of the following is an advantage of a variable annuity?
Flexibility in investment options
ExplanationInvestment options flexibility
#15
What is the primary difference between a fixed annuity and a variable annuity?
Fixed annuities offer guaranteed returns, while variable annuities do not.
ExplanationGuaranteed returns vs. non-guaranteed
#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.
ExplanationPayment to multiple vs. single person
#17
What is the purpose of a cost-of-living adjustment (COLA) rider in an annuity?
To provide protection against inflation by adjusting payments based on changes in the cost of living
ExplanationInflation protection through payment adjustment
#18
What happens to the annuity payments upon the death of the annuitant in a life-only annuity?
Payments stop
ExplanationPayments cessation upon annuitant's death