Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
The better your investment choices pay off, the more your fixed annuity will pay.
False. Fixed annuities earn a fixed income rate and pay a fixed income, regardless of the performance of the underlying investments. You do not make investment choices in a fixed annuitypremiums go into the general account of the company.
3.
The earnings on fixed annuities are free from taxes until you annuitize.
True. Annuity income is tax-deferred.
4.
When you annuitize, you are paying into your annuity account.
False. When you annuitize, you begin receiving income from your annuity.
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.