#1
What is an annuity?
A type of investment where payments are made at regular intervals for a set period of time
ExplanationInvestment with regular interval payments.
#2
Which of the following is not a type of annuity?
Static annuity
ExplanationStatic annuity is not a type of annuity.
#3
What is the main advantage of a fixed annuity?
It provides guaranteed income for life
ExplanationGuaranteed lifelong income.
#4
How is the payout of a variable annuity determined?
It fluctuates based on the performance of underlying investments
ExplanationVariable annuity payout linked to investment performance.
#5
What is the annuitization phase of an annuity?
The phase when the annuity holder receives periodic payments
ExplanationPeriod of receiving periodic payments.
#6
Which of the following is a disadvantage of annuities?
They may have high fees and expenses
ExplanationPotential downside: high fees and expenses.
#7
What is a rider in the context of annuities?
An optional feature that can be added to an annuity contract for an additional cost
ExplanationOptional, extra-cost feature in annuity contracts.
#8
What is the key difference between an immediate annuity and a deferred annuity?
Immediate annuities start paying out immediately while deferred annuities start at a later date
ExplanationImmediate starts now, deferred starts later.
#9
What is the surrender period of an annuity?
The period during which withdrawals are not allowed without penalty
ExplanationWithdrawals restricted without penalty during this period.
#10
What is a death benefit in the context of annuities?
The amount the annuity holder's beneficiaries receive if the annuity holder dies before annuitization
ExplanationBeneficiary amount if annuity holder dies before payout.
#11
What is the primary purpose of a deferred annuity?
To accumulate funds for future income needs
ExplanationAccumulating funds for future income.
#12
What is the purpose of a life annuity with period certain?
To provide income for the rest of the annuitant's life with a guaranteed minimum period
ExplanationGuaranteed income with a minimum period.
#13
How does taxation work for annuity payments?
Annuity payments are taxed as ordinary income
ExplanationTaxed as ordinary income.
#14
What is the purpose of a qualified longevity annuity contract (QLAC)?
To offer protection against longevity risk by deferring income until later in life
ExplanationProtection against longevity risk by deferring income.