All Courses > Portfolios > 400
Portfolios 401: Deferred, Fixed, and Variable Annuities

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
How do equity-indexed annuities let you share in equity market returns?
Choose wisely. There is only one correct answer.
They offer a percentage of the return of a stock market index. This is an extra perk of these annuities.
2.
A fixed annuity is a good hedge against inflation.
Choose wisely. There is only one correct answer.
False. Fixed-income payments and relatively low returns mean that annuities provide little protection against inflation.
3.
Your monthly income from a fixed annuity is based on _______.
Choose wisely. There is only one correct answer.
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.
4.
Unlike with fixed annuities, your payments from a variable annuity are not guaranteed.
Choose wisely. There is only one correct answer.
True. They depend in part on the performance of the underlying investments in the separate accounts to which you contribute.
5.
A non-qualified annuity can be a good way to avoid all of the following except _______.
Choose wisely. There is only one correct answer.
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!).
6.
When you annuitize, you are paying into your annuity account.
Choose wisely. There is only one correct answer.
False. When you annuitize, you begin receiving income from your annuity.
7.
With annuities, mortality risk benefits _______.
Choose wisely. There is only one correct answer.
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.
8.
An annuity that allows you to shelter some of your current income from taxes is called a _______.
Choose wisely. There is only one correct answer.
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.