Income Beginner: Introduction to Annuities

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Which of the following is acceptable for putting money into a flexible premium annuity?
Choose wisely. There is only one correct answer.
All of the above. With a flexible premium annuity, an investor can make a single premium payment, periodic payments, or sporadic payments according to no particular schedule.
2.
Once the money is annuitized from an annuity that had received nondeductible premiums, _______.
Choose wisely. There is only one correct answer.
A portion of each payment is taxed according to an IRS formula.
3.
General account funds cannot be commingled with any other funds.
Choose wisely. There is only one correct answer.
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.
4.
If an annuitant does not wish to annuitize the funds, he or she can simply surrender the full value of the annuity.
Choose wisely. There is only one correct answer.
True. If the annuitant does not wish to annuitize, he or she can simply surrender the full value of the annuity.
5.
At any time after commencement of lifetime annuity payments, the annuitant may request a surrender to receive a lump sum cash payment.
Choose wisely. There is only one correct answer.
False. To receive lifetime annuity payments, the annuitant must surrender the annuity cash value to the insurance company.
6.
An annuity should be used only for retirement planning.
Choose wisely. There is only one correct answer.
False. An annuity can be an ideal investment vehicle for such important goals as a grandchilds education expenses and paying for hospital and medical costs associated with an accident or lengthy illness during ones older years.
7.
Under what type of payout arrangement can an annuitant arrange for a certain dollar amount to be periodically liquidated from the annuity and sent to him or her?
Choose wisely. There is only one correct answer.
Systematic withdrawals. With this option, a certain amount is sent to the annuitant every month, quarter, or year.