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Portfolios 401: Deferred, Fixed, and Variable Annuities

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1.
Equity-indexed annuities typically _______ some safeguards if the stock market dives.
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Do provide. These annuities allow you not only to share when the market goes up, but they usually limit your losses when the market goes down.
2.
All of the following are benefits of deferred annuities except _______.
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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.
3.
With annuities, mortality risk benefits _______.
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Both. Annuitants trade the risk of dying before collecting full value for higher payments and possibly collecting more than full value if they live long.
4.
What is taxed during the accumulation period of a non-qualified annuity?
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Annuity contributions. The income you contribute to a non-qualified annuity is subject to taxation during the accumulation period. A non-qualified annuity is one that is outside of a retirement plan.
5.
Unlike with fixed annuities, your payments from a variable annuity are not guaranteed.
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True. They depend in part on the performance of the underlying investments in the separate accounts to which you contribute.
6.
When you annuitize, you are paying into your annuity account.
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False. When you annuitize, you begin receiving income from your annuity.
7.
An annuity that delays payments until some point in the future is called a(n) _______.
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Deferred annuity. A deferred annuity delays payments until some point in the future.
8.
Your monthly income from a fixed annuity is based on _______.
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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.