Income Intermediate: Variable Annuities

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1.
An annuity that pays you income as long as you live, but stops when you die, is a ________.
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Life annuity. Life annuities pay the annuitant a regular income as long as he or she lives.
2.
When you annuitize, you are paying into your annuity account.
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False. When you annuitize, you begin receiving income from your annuity.
3.
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.
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.
Which of the following is not a characteristic investment account available with variable annuities?
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General account. Stock, bond, and money market accounts are the "characteristic" separate accounts available with variable annuities.