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Retirement Intermediate: Variable Annuities

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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.