Income Intermediate: Variable Annuities

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1.
A period certain annuity pays income _______.
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For a fixed term. A period certain annuity pays income for a fixed term, even if the annuitant doesnt survive the term.
2.
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.
3.
Unlike with fixed annuities, your payments from a variable annuity are not guaranteed.
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True. They depend in part on the performance of the underlying investments in the separate accounts to which you contribute.
4.
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.
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.