Income Intermediate: Fixed Annuities

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1.
Your monthly income from a fixed annuity is based on _______.
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Your age and your sex. Your age and sex are two factors that determine the monthly payment you receive from an annuity. "The value of your investments" indicates a variable annuity.
2.
The period during which annuity premiums are paid is called the _______.
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Accumulation period. In the accumulation period, the annuity owner (annuity holder) pays premiums to the company.
3.
A fixed annuity is a good hedge against inflation.
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False. Fixed-income payments and relatively low returns mean that annuities provide little protection against inflation.
4.
Since you may die before you collect the full value of your annuity through the life annuity option, it is better to select an option with a period certain provision.
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False. Though this could be true, it really depends upon one's objectives. Each option has benefits and tradeoffs.
5.
The earnings on fixed annuities are free from taxes until you annuitize.
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True. Annuity income is tax-deferred.