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.
A non-qualified annuity can be a good way to avoid all of the following except _______.
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Early withdrawal penalties. Unlike the other choices, early withdrawal penalties can't be avoided with deferred annuities (except, of course, by not withdrawing your funds prematurely!).
3.
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.
4.
The person who receives the benefits of an annuity is the _______.
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Annuitant. While the annuitant and the owner may be the same person, and some kinds of annuities make payments to other beneficiaries, "annuitant" refers to the primary individual who receives the benefits of an annuity.
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).