Income Intermediate: Deferred Annuities

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1.
An annuity that makes payments during the lives of more than one individual is called a _______.
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Joint and survivor annuity. Joint and survivor annuities make payments during the life of the annuitant and a beneficiary, such as a spouse.
2.
An annuity that delays payments until some point in the future is called a(n) _______.
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Deferred annuity. A deferred annuity delays payments until some point in the future.
3.
All of the following are benefits of deferred annuities except _______.
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Easy access to capital. Easy access to capital is not a benefit of deferred annuities, where surrender fees and tax penalties can affect early withdrawals.
4.
You must pay taxes on investment earnings that build in your annuity account.
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False. Your earnings in a deferred annuity build on a tax-deferred basis. You pay no tax on them until you receive them as a payout.
5.
An annuity's exclusion ratio keeps your contributions from being taxed twice.
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True. The exclusion ratio determines what part of your annual payments is made up of earnings (which are taxed) and what part is your basis (the money you contributed to your annuity, which was already taxed).