Equity-indexed annuities typically promise what kind of return?
A guaranteed rate of return. A guaranteed rate of return is promised, and there is usually some participation in stock market returns as well.
3.
When you invest in a variable annuity, your funds go into the insurance company's general account.
False. In contrast to a fixed annuity, in which your funds are limited to the general account of the insurance company, variable annuities make available separate account investments in the stock, bond, and/or money markets.
4.
A non-qualified annuity can be a good way to avoid all of the following except _______.
Early withdrawal penalties. Unlike the other choices, early withdrawal penalties can't be avoided with deferred annuities (except, of course, by not withdrawing your funds prematurely!).
5.
An annuity that allows you to shelter some of your current income from taxes is called a _______.
Qualified annuity. A qualified annuity, based on the assets of a qualified retirement plan such as a 401(k) or 403(b), allows you to shelter some of your current income from taxes.
6.
The earnings on fixed annuities are free from taxes until you annuitize.
True. Annuity income is tax-deferred.
7.
Since you may die before you collect the full value of your annuity through the life annuity option, it is better to select an option with a period certain provision.
False. Though this could be true, it really depends upon one's objectives. Each option has benefits and tradeoffs.
8.
The period during which you receive payments from an annuity contract is called the _______.
Payout period. In the payout period you surrender the value of the annuity contract in exchange for guaranteed monthly payments of benefits.
