XCEL CHAPTER 8: ANNUITIES EXAM
2025 QUESTIONS AND ANSWERS
Which market index is normally associated with an indexed annuity's rate of return?
A) NAIC
B) SEC
C) S & P 500
D) A & P 300 - ANS C) S & P 500
Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of
owning this type of annuity?
A) Payments cease 5 years after the annuitant's death
B) During periods of inflation, annuitants will experience an increase in purchasing power of
their payments
C) During periods of inflation, annuitants will experience a decrease in purchasing power of
their payments
D) Payment amounts can be unpredictable from month to month - ANS C) During periods of
inflation, annuitants will experience a decrease in purchasing power of their payments
Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is
this annuity in?
A) Payout period
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, B) Accumulation period
C) Deferred period
D) Growth period - ANS B) Accumulation period
What is the primary reason for buying an annuity?
A) Provide tax-free income
B) Provide a risky, yet high return investment
C) Provide an instant estate
D) Provide future economic security - ANS D) Provide future economic security
What happens to interest earned if the annuitant dies before the payout start date?
A) It is taxable
B) It is taxable only if no beneficiary is named
C) It is not taxable
D) It is only taxable if contract has been in force under one year - ANS A) It is taxable
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE
statement?
A) Principal returned is taxable
B) Benefits are still payable tax-free to the beneficiary
C) Company retains entire cash value
D) Premiums paid plus interest earned is returned to the beneficiary - ANS D) Premiums paid
plus interest earned is returned to the beneficiary
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2025 QUESTIONS AND ANSWERS
Which market index is normally associated with an indexed annuity's rate of return?
A) NAIC
B) SEC
C) S & P 500
D) A & P 300 - ANS C) S & P 500
Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of
owning this type of annuity?
A) Payments cease 5 years after the annuitant's death
B) During periods of inflation, annuitants will experience an increase in purchasing power of
their payments
C) During periods of inflation, annuitants will experience a decrease in purchasing power of
their payments
D) Payment amounts can be unpredictable from month to month - ANS C) During periods of
inflation, annuitants will experience a decrease in purchasing power of their payments
Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is
this annuity in?
A) Payout period
1 @COPYRIGHT THEBRIGHT 2025/2026
, B) Accumulation period
C) Deferred period
D) Growth period - ANS B) Accumulation period
What is the primary reason for buying an annuity?
A) Provide tax-free income
B) Provide a risky, yet high return investment
C) Provide an instant estate
D) Provide future economic security - ANS D) Provide future economic security
What happens to interest earned if the annuitant dies before the payout start date?
A) It is taxable
B) It is taxable only if no beneficiary is named
C) It is not taxable
D) It is only taxable if contract has been in force under one year - ANS A) It is taxable
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE
statement?
A) Principal returned is taxable
B) Benefits are still payable tax-free to the beneficiary
C) Company retains entire cash value
D) Premiums paid plus interest earned is returned to the beneficiary - ANS D) Premiums paid
plus interest earned is returned to the beneficiary
2 @COPYRIGHT THEBRIGHT 2025/2026
