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.
The earnings on variable annuities are taxed during the accumulation period.
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False. The earnings on variable annuities are tax-deferred until payout.
3.
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.
4.
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.
5.
Which of the following is a benefit of variable annuities?
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Better potential return. Variable annuities feature neither guaranteed returns nor fixed payments.