WebCe Annuities Questions with 100% Correct Answers

Which of the following is a purpose of the annuity? A. The replacement of earnings upon the disability of an individual B. The distribution of a lifetime income C. The discounting of a principal sum back to its present value D. The creation of a fund at the earth of an individual Correct Answer B Why: the purpose of an annuity is the distribution of a lifetime income Annuity purchasers transfer to an insurance company their risk of A. Outliving their financial resources B. Becoming uninsurable C. Dying prematurely D. Having to pay unexpectedly high estate taxes Correct Answer A Why: when people purchase annuities, they transfer the risk of outliving their financial resources to an insurance company Under which of the following payout options are payments made regardless of how long the annuitant lives? A. Fixed period payments B. Interest only payments C. Life annuity payments D. Fixed amount payments Correct Answer C Why: life annuity payments are made regardless of how long the annuitant lives An annuity is sometimes called the flip side of A. Qualified retirement plans B. Social security C. Life insurance D. Compounding Correct Answer C Why: the flip side of an annuity is life insurance Who receives lifetime payments from an annuity? A. A beneficiary B. A trustee C. An executor D. An annuitant Correct Answer D