Uses of Annuities (ID-L)

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Question 1 of 6

1. Question

Isabella was severely injured in a car accident and received lump sum settlement. She decided to exchange the lump sum for an immediate annuity which will provide her with what?

Money that will grow tax-deferred until she decides to annuitize the annuity at a later date

A non-guaranteed death benefit paid to her beneficiary when Isabella dies

A guaranteed death benefit paid to her beneficiary when Isabella dies

A guaranteed income for a specific number of years—or for the rest of her life

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Question 2 of 6

2. Question

If a person wants to turn a lump sum into a guaranteed income for a specific number of years—or for the rest of his or her life—that can best be accomplished with which product?

An immediate annuity

A term life insurance policy

A mutual fund

A deferred variable annuity that is not annuitized

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Question 3 of 6

3. Question

When a person receives a substantial amount of money as a result of a legal settlement involving situations such as car accidents, work-related accidents, medical malpractice, and divorce—it is called a what?

Benefit payment option

Lump sum settlement

Insurable interest

Cash surrender value

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Question 4 of 6

4. Question

Which of the following is NOT true about a deferred annuity?

Deferred annuities are intended for people who have long-term financial goals and do not have an immediate need for the money at the time it is placed into the annuity.

The money in a deferred annuity can grow as a result of interest or investment income.

Only banks sell deferred annuities.

A main attraction of deferred annuities is the tax advantage, since the growth is tax-deferred.

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Question 5 of 6

5. Question

Which of the following is NOT true about a deferred annuity?

They can be used to save money for future education, long-term care, or retirement needs.

They grow tax-deferred.

They can be a safe place to store extra money that is not needed until later.

They are intended for people who have short-term financial goals with an immediate need to use the money.

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Question 6 of 6

6. Question

Which rider can be added to a variable annuity to protect against stock market risk?

Guaranteed minimum withdrawal benefit (GMWB)

Life with guaranteed miniumum (LWGM)

Joint life and survivorship (JLS)

Annuities certain

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Uses of Annuities (ID-L)

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