Income Beginner: Introduction to Annuities

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1.
With a flexible premium annuity, an annuitant should never miss a premium payment, as this will likely void his or her contract.
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False. With a flexible premium annuity, generally, a scheduled payment can be missed without fear of losing any of the preceding payments into the plan.
2.
If an annuitant will receive payments for life, but at least for 10 years, which payout option has he or she selected?
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A life annuity with period certain. The annuitant receives payments for life, with a certain period of time guaranteed. If the annuitant dies before expiration of the period certain, payments continue to the named beneficiary for the remainder of the period.
3.
Once the money is annuitized from an annuity that had received nondeductible premiums, _______.
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A portion of each payment is taxed according to an IRS formula.
4.
General account funds cannot be commingled with any other funds.
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True. By law, funds in the insurance companys general account cannot be commingled with any other funds, even if these other funds are owned and controlled by the insurance company.
5.
At any time after commencement of lifetime annuity payments, the annuitant may request a surrender to receive a lump sum cash payment.
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False. To receive lifetime annuity payments, the annuitant must surrender the annuity cash value to the insurance company.
6.
Most insurance companies allow loans from an annuity.
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False. Because loans are classified as taxable withdrawals, most insurance companies do not permit loans from annuities.
7.
If an annuitant does not wish to annuitize the funds, he or she can simply surrender the full value of the annuity.
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True. If the annuitant does not wish to annuitize, he or she can simply surrender the full value of the annuity.