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1.
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.
2.
The period during which you receive payments from an annuity contract is called the _______.
Payout period. In the payout period you surrender the value of the annuity contract in exchange for guaranteed monthly payments of benefits.
3.
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.
4.
The period during which annuity premiums are paid is called the _______.
Accumulation period. In the accumulation period, the annuity owner (annuity holder) pays premiums to the company.
5.
What is taxed during the accumulation period of a non-qualified annuity?
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.