Annuities Comprehensive Questions
(Frequently Tested) with Verified
Answers
Which one of the following most correctly describes the process that occurs when a group
annuity member retires?
a. The group annuity begins paying the monthly income amount directly from the group
contract.
b. The retiree converts his or her accumulated share of the group contract into an individual
annuity.
c. An individual annuity contract is issued to the retiring member using funds from the group
contract.
d. The employer buys a variable annuity, which pays the benefits promised retirees in the group
contract. - Answer: c. An individual annuity contract is issued to the retiring member using
funds from the group contract.
The retiree does not convert his or her accumulated share of the group contract into an
individual annuity.
Which of the following would be most appropriate for Haley, 55, if her primary objective is to
ensure having an income she cannot outlive?
a. mutual funds
b. an annuity
c. life insurance
d. CDs - Answer: b. an annuity
Annuities provide benefits during one's life. They ensure that one's income cannot be outlived.
,All of the following statements about annuities are correct, EXCEPT:
a. Annuities are sold by life insurance agents and are issued by life insurance companies.
b. An annuity converts a sum of money into a series of income payments.
c. The primary purpose of an annuity is to guarantee the accumulation of money over time.
d. Annuities are not life insurance. - Answer: c. The primary purpose of an annuity is to
guarantee the accumulation of money over time.
The primary purpose of an annuity is to liquidate a sum of money over a guaranteed period of
time.
What is the name of the period during which premium funds are paid into an annuity contract?
a. the benefit period
b. the accumulation period
c. the annuity payout
d. the annuity period - Answer: b. the accumulation period
The annuity payout is the dollar amount paid by an annuity at maturity.
The purpose for a long-term care rider with a deferred annuity contract is to:
a. allow the deferred annuity to be annuitized earlier than age 65 if the annuitant requires long-
term care
b. allow the annuity owner to assign the deferred annuity to a nursing home
c. allow tax-free withdrawals from the deferred annuity if the annuitant requires long-term care
d. allow withdrawals from the deferred annuity without a surrender charge if the annuitant is
confined to a nursing home - Answer: d. allow withdrawals from the deferred annuity without a
surrender charge if the annuitant is confined to a nursing home
, Withdrawals from a deferred annuity are not exempt from taxation regardless of the reason for
the withdrawal.
The charge-free withdrawals provision of a deferred annuity contract does which of the
following?
a. It exempts deferred annuity withdrawals from surrender charges and penalty taxes as long as
the withdrawal does not exceed a specified percentage of the accumulated value.
b. It permits annuity contract owners to withdraw a specified percentage of the accumulated
value annually without imposing a surrender charge.
c. It permits annuity contract owners to withdraw a specified percentage of the accumulated
value on a one-time basis without imposing a surrender charge.
d. It exempts deferred annuity withdrawals from surrender charges and all taxes as long as the
withdrawal does not exceed a specified percentage of the accumulated value. - Answer: b. It
permits annuity contract owners to withdraw a specified percentage of the accumulated value
annually without imposing a surrender charge.
The charge-free withdrawal provision does not exempt the annuity owner from taxation.
All the following statements regarding annuities are correct EXCEPT:
a. The insurer guarantees income payments for whatever annuity payout period the annuitant
selects.
b. The insurer can provide a guaranteed stream of income for a single life or for a joint life,
based on life expectancies and its mortality experience.
c. Deferred annuities are a suitable replacement for life insurance.
d. Annuities provide income payments that annuitants cannot outlive even if they surpass their
life expectancy. - Answer: c. Deferred annuities are a suitable replacement for life insurance.
They pay a certain amount for the length of what is an unknown time.
(Frequently Tested) with Verified
Answers
Which one of the following most correctly describes the process that occurs when a group
annuity member retires?
a. The group annuity begins paying the monthly income amount directly from the group
contract.
b. The retiree converts his or her accumulated share of the group contract into an individual
annuity.
c. An individual annuity contract is issued to the retiring member using funds from the group
contract.
d. The employer buys a variable annuity, which pays the benefits promised retirees in the group
contract. - Answer: c. An individual annuity contract is issued to the retiring member using
funds from the group contract.
The retiree does not convert his or her accumulated share of the group contract into an
individual annuity.
Which of the following would be most appropriate for Haley, 55, if her primary objective is to
ensure having an income she cannot outlive?
a. mutual funds
b. an annuity
c. life insurance
d. CDs - Answer: b. an annuity
Annuities provide benefits during one's life. They ensure that one's income cannot be outlived.
,All of the following statements about annuities are correct, EXCEPT:
a. Annuities are sold by life insurance agents and are issued by life insurance companies.
b. An annuity converts a sum of money into a series of income payments.
c. The primary purpose of an annuity is to guarantee the accumulation of money over time.
d. Annuities are not life insurance. - Answer: c. The primary purpose of an annuity is to
guarantee the accumulation of money over time.
The primary purpose of an annuity is to liquidate a sum of money over a guaranteed period of
time.
What is the name of the period during which premium funds are paid into an annuity contract?
a. the benefit period
b. the accumulation period
c. the annuity payout
d. the annuity period - Answer: b. the accumulation period
The annuity payout is the dollar amount paid by an annuity at maturity.
The purpose for a long-term care rider with a deferred annuity contract is to:
a. allow the deferred annuity to be annuitized earlier than age 65 if the annuitant requires long-
term care
b. allow the annuity owner to assign the deferred annuity to a nursing home
c. allow tax-free withdrawals from the deferred annuity if the annuitant requires long-term care
d. allow withdrawals from the deferred annuity without a surrender charge if the annuitant is
confined to a nursing home - Answer: d. allow withdrawals from the deferred annuity without a
surrender charge if the annuitant is confined to a nursing home
, Withdrawals from a deferred annuity are not exempt from taxation regardless of the reason for
the withdrawal.
The charge-free withdrawals provision of a deferred annuity contract does which of the
following?
a. It exempts deferred annuity withdrawals from surrender charges and penalty taxes as long as
the withdrawal does not exceed a specified percentage of the accumulated value.
b. It permits annuity contract owners to withdraw a specified percentage of the accumulated
value annually without imposing a surrender charge.
c. It permits annuity contract owners to withdraw a specified percentage of the accumulated
value on a one-time basis without imposing a surrender charge.
d. It exempts deferred annuity withdrawals from surrender charges and all taxes as long as the
withdrawal does not exceed a specified percentage of the accumulated value. - Answer: b. It
permits annuity contract owners to withdraw a specified percentage of the accumulated value
annually without imposing a surrender charge.
The charge-free withdrawal provision does not exempt the annuity owner from taxation.
All the following statements regarding annuities are correct EXCEPT:
a. The insurer guarantees income payments for whatever annuity payout period the annuitant
selects.
b. The insurer can provide a guaranteed stream of income for a single life or for a joint life,
based on life expectancies and its mortality experience.
c. Deferred annuities are a suitable replacement for life insurance.
d. Annuities provide income payments that annuitants cannot outlive even if they surpass their
life expectancy. - Answer: c. Deferred annuities are a suitable replacement for life insurance.
They pay a certain amount for the length of what is an unknown time.
