Annuities CE UPDATED Actual Questions and CORRECT Answer
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Course
Annuities CE
Institution
Annuities CE
Annuities CE UPDATED Actual Questions
and 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 cr...
Annuities CE UPDATED Actual Questions
and 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
Why: an annuity contract owner names the annuitant, who receives lifetime payments from
the annuity. Usually, the contract owner and the annuitant are the same person. The contract
owner also names a beneficiary, who receives any survivor benefits payable under the annuity
upon the annuitant's death.
An annuity purchased with a single premium to begin providing income one payment interval
in the future is called
A. A fixed annuity
B. An immediate annuity
C. A variable annuity
D. A deferred annuity - CORRECT ANSWER- ✔✔B
Why: an immediate annuity is purchased with a single premium and begins providing income
one payment interval in the future
, The type of annuity that guarantees a minimum rate of return is
A. The variable annuity
B. The fixed annuity
C. The immediate annuity
D. The deferred annuity - CORRECT ANSWER- ✔✔B
Why: the fixed annuity guarantees a minimum rate of return
The rate of return on a variable annuity is
A. Tied to the performance of securities in the insurer's separate account
B. Variable within a specified number of percentage points
C. Flexible but guaranteed to be no less than the minimum rate specified in the contract
D. Guaranteed to reflect activity on the New York Stock Exchange - CORRECT ANSWER-
✔✔A
Why: a variable annuity's rate of return is tied to the performance of securities in the insurer's
separate account
An individual who wants the potential for hedging against inflation with money invested in
an annuity should choose
A. A variable annuity
B. A split-dollar annuity
C. A fixed annuity
D. An immediate annuity - CORRECT ANSWER- ✔✔A
Why: a variable annuity allows an individual to hedge against inflation
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