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1.
Unlike with fixed annuities, your payments from a variable annuity are not guaranteed.
True. They depend in part on the performance of the underlying investments in the separate accounts to which you contribute.
2.
The period during which annuity premiums are paid is called the _______.
Accumulation period. In the accumulation period, the annuity owner (annuity holder) pays premiums to the company.
3.
The earnings on variable annuities are taxed during the accumulation period.
False. The earnings on variable annuities are tax-deferred until payout.
4.
A fixed annuity is a good hedge against inflation.
False. Fixed-income payments and relatively low returns mean that annuities provide little protection against inflation.
5.
Your monthly income from a fixed annuity is based on _______.
Your age and your sex. Your age and sex are two factors that determine the monthly payment you receive from an annuity. "The value of your investments" indicates a variable annuity.
6.
How do equity-indexed annuities let you share in equity market returns?
They offer a percentage of the return of a stock market index. This is an extra perk of these annuities.
7.
All of the following are benefits of deferred annuities except _______.
Easy access to capital. Easy access to capital is not a benefit of deferred annuities, where surrender fees and tax penalties can affect early withdrawals.
8.
An annuity that delays payments until some point in the future is called a(n) _______.
Deferred annuity. A deferred annuity delays payments until some point in the future.
