#1
What is an annuity?
A series of periodic payments
ExplanationAn annuity is a financial product that provides a series of periodic payments.
#2
What is the key benefit of an annuity?
Guaranteed income stream
ExplanationThe key benefit of an annuity is the assurance of a guaranteed income stream.
#3
Which of the following is a component of an annuity contract?
Principal
ExplanationPrincipal is a crucial component of an annuity contract.
#4
What is the key difference between fixed and variable annuities?
Fixed annuities offer guaranteed returns, while variable annuities offer returns based on market performance
ExplanationFixed annuities provide guaranteed returns, while variable annuities depend on market performance.
#5
What is the annuitization phase of an annuity?
The period during which the annuitant receives periodic payments
ExplanationThe annuitization phase is when the annuitant starts receiving periodic payments.
#6
What is the difference between immediate and deferred annuities?
Immediate annuities start payments immediately, while deferred annuities start payments at a later date
ExplanationImmediate annuities begin payments immediately, while deferred annuities start payments later.
#7
What is the surrender period in an annuity contract?
The period during which the annuitant can cancel the contract without penalty
ExplanationThe surrender period is when the annuitant can cancel the contract without incurring penalties.
#8
What is a rider in an annuity contract?
A supplemental benefit that can be added to the annuity contract
ExplanationA rider is a supplementary benefit that can be added to an annuity contract.
#9
What is the mortality risk associated with annuities?
The risk of outliving one's annuity payments
ExplanationMortality risk in annuities is the risk of outliving the received payments.
#10
How are annuity payments taxed?
Annuitants are taxed on their payments as ordinary income
ExplanationAnnuitants are taxed on annuity payments as ordinary income.