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Retirement Intermediate: Variable Annuities

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1.
When you invest in a variable annuity, your funds go into the insurance company's general account.
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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.
2.
A period certain annuity pays income _______.
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For a fixed term. A period certain annuity pays income for a fixed term, even if the annuitant doesnt survive the term.
3.
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.
4.
The earnings on variable annuities are taxed during the accumulation period.
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False. The earnings on variable annuities are tax-deferred until payout.
5.
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.