Annuities and Retirement Plans Lesson 6 with Complete Solutions

Annuities and Retirement Plans Lesson 6 with Complete Solutions 1. **To receive the maximum income from an annuity, which option should be selected?** - A) Immediate Annuity - B) Life with 20-Year Period Certain - C) Life Refund - D) Life Annuity - D) Life Annuity **Explanation:** The life annuity option provides the highest payout amount because it only pays during the annuitant's lifetime, with no payments after death. 2. **Which risk does the annuity phase of a contract protect against?** - A) Early Death - B) Long-term Disability - C) Outliving Assets - D) Job Loss - C) Outliving Assets **Explanation:** Annuities mitigate the risk of outliving one's assets by providing a steady income stream for as long as the annuitant lives. 3. **If an annuitant dies before receiving at least the total purchase premium, what settlement option ensures the beneficiary receives the remaining payments?** - A) Straight Life Annuity - B) Refund Life Annuity - C) Joint and Survivor Annuity - D) Life Annuity with Period Certain - B) Refund Life Annuity **Explanation:** A refund life annuity ensures that if the annuitant dies before receiving payments equal to the purchase premium, the remaining payments go to the beneficiary. 4. **Which statement is true regarding joint and full survivor annuity settlement options?** - A) The survivor receives 50% of the original income. - B) The beneficiary receives the remaining balance of the annuity. - C) The survivor receives 100% of the original joint income. - D) An installment refund annuity stops payments upon the annuitant's death. - C) The survivor receives 100% of the original joint income **Explanation:** Under a joint and full survivor annuity, the surviving party receives the same income amount as the original joint income