Test Your Annuity IQ

Annuity Quiz We put this quiz together from the California State insurance licensing test. These are the types of questions your annuity agent may or may not have been asked to qualify them to sell Annuities. This may be all they know about these complex products! The answers are at the bottom.

• Most Americans use annuities to give them __________?
  • Stream of retirement income
  • Tax deduction
  • Emergency fund
  • Income in the event of disability
• If the participation rate is 70% and the index-linked interest calculated in an Equity Indexed Annuity policy is 6%, how much will be credited to the policy?
  • 4.4%
  • 2.4%
  • 4.2%
  • 6%
• Unlike other savings vehicles, the growth inside an annuity is __________?
  • Tax creditable
  • Tax deterred
  • Tax deductible
  • Tax deferred
• The period of time during which there is a build-up in an annuity of interest is call the __________?
  • Gross up phase
  • Deferral phase
  • Accumulation phase
  • Interest phase
• Periodic payments that begin within one year after purchase are characteristic of a(n) _______________ annuity?
  • Imediate
  • Deferred
  • Tax sheltered
  • Qualified
• Deferred annuities provide a great deal of flexibility in the __________ and __________ of payout benefits?
  • Timing and type
  • Amount and type
  • Timing and amounts
  • Growth and determination
• A variable annuity fluctuates in accordance with the __________ of its investments?
  • Origin
  • Performance
  • Diversification
  • Expense loads
• All of the following are phases of an annuity EXCEPT?
  • Accumulation
  • Contribution
  • Distribution
  • Interpretation
• Split annuity combines a _______________?
  • Fixed deferred and an immediate annuity
  • Variable and fixed annuity
  • Term life and fixed annuity
  • Endowment and immediate annuity
• Premiums in fixed annuities are either__________ or __________?
  • High or low
  • Fixed or variable
  • Single or flexible
  • Taxable or deductible
• IRS specifies age __________ as the maximum payout age for fixed annuities?
  • 59 ½
  • 70 ½
  • 100
  • no specific age
• Generally, companies charge a __________ surrender fee?
  • Level
  • Increasing
  • Decreasing
  • Fluctuating
• If an annuitant dies or becomes disable, most companies __________ the surrender charges?
  • Increase
  • Average
  • Freeze
  • Waive
• A “1035 Exchange” involves the exchange of all the following EXCEPT?
  • Life insurance policy
  • Endowment
  • Disability policy
  • Annuity contract
• IRS imposes a __________% penalty on withdrawals prior to age 59 ½?
  • 5
  • 10
  • 15
  • 20
• Companies allow for an annuitant to “bail out” if their interest rate is __________ a pre-determined level?
  • More than
  • Less than
  • Unchanged from
  • One half of
• An annuity that has all the guarantees of an annuity contract plus the potential for stock market returns is a(n) __________ annuity?
  • Interest sensitive
  • Bond index
  • Equity index
  • Market specific
• Guaranteed __________ and guaranteed __________ options are characteristic of a fixed annuity?
  • Interest / income
  • Rates / options
  • Fees / income
  • Interest / investment
• A fixed tax deferred annuity is safe due to __________?
  • Flexibility
  • Dollar cost averaging
  • Diversification
  • Reserves
• Principal and interest can continue to grow until one becomes age __________?
  • 85
  • 90
  • 95
  • 100
• One sum of $’s contributed to an annuity and left to accumulate is what type of annuity?
  • Single premium deferred
  • Single premium immediate
  • Single premium flexible
  • Single premium accumulator
• Two types of single premium annuities are __________ and __________?
  • Deferred / indexed
  • Deferred / flexible
  • Immediate / indexed
  • Immediate / deferred
• Payments stop at the annuitant’s death in a __________ settlement?
  • Joint and survivor
  • Period certain
  • Joint life
  • Life only
• An interest rate that is higher in the first year and is guaranteed for one year is a(n) __________ rate?
  • Index
  • Bonus
  • Variable
  • Fixed
• Almost all annuities allow for a withdrawal of __________ of their account value before a surrender charge is applied?
  • 5
  • 10
  • 15
  • 25

Here are the Answers to the Quiz