Annuities Practice Questions
68 free annuities questions for the California Life & Health insurance license exam. Pick any question — answer it and get the full 3-part explanation, no signup required.
- 1.The fundamental purpose of an annuity is best described as protecting against the risk of:Difficulty 1/5
- 2.How does an annuity insurer keep its promise to make lifetime income payments to every annuitant?Difficulty 2/5
- 3.An insurer pricing a lifetime annuity must rely primarily on which statistical tool?Difficulty 1/5
- 4.Which statement correctly distinguishes the owner from the annuitant of an annuity contract?Difficulty 2/5
- 5.In an annuity contract, the role of the beneficiary is to:Difficulty 1/5
- 6.A corporation purchases an annuity with a single premium, names its CEO as the annuitant, and designates th…Difficulty 3/5
- 7.Which right does the owner of an annuity contract typically possess?Difficulty 1/5
- 8.The most common personal use of a deferred annuity is to:Difficulty 1/5
- 9.A structured settlement in a personal injury case is most often funded with which type of annuity?Difficulty 2/5
- 10.What licensing requirement applies to a producer selling variable annuities?Difficulty 2/5
- 11.Where are premium payments under a variable annuity held?Difficulty 2/5
- 12.How is interest credited on an equity-indexed annuity?Difficulty 2/5
- 13.A deferred annuity differs from an immediate annuity in that a deferred annuity:Difficulty 1/5
- 14.An immediate annuity is purchased with a single premium, and its income payments must begin:Difficulty 1/5
- 15.What is the principal tax difference between a qualified and a nonqualified annuity?Difficulty 2/5
- 16.Under a group annuity contract, the employer or plan sponsor typically holds the master contract while each…Difficulty 2/5
- 17.What happens under a market value adjustment (MVA) annuity when the owner withdraws funds early and interes…Difficulty 2/5
- 18.A 403(b) tax-sheltered annuity (TSA) is best described as:Difficulty 1/5
- 19.Which employer is eligible to offer its employees a 403(b) tax-sheltered annuity?Difficulty 1/5
- 20.Among the available annuity payout options, the straight life (pure life) option pays the annuitant the lar…Difficulty 1/5
- 21.What does a life annuity with a refund feature provide if the annuitant dies shortly after annuitization be…Difficulty 2/5
- 22.Under a joint and last survivor annuity option, income payments:Difficulty 1/5
- 23.A 67-year-old married annuitant is ready to annuitize her deferred annuity. She wants income for her own li…Difficulty 2/5
- 24.All of the following statements about the federal income tax treatment of unpaid annuity benefits paid to a…Difficulty 2/5
- 25.An owner paid $100,000 into a nonqualified annuity with an installment refund option. After only two years …Difficulty 3/5
- 26.A consumer asks how much it would cost to take money out of a deferred annuity during the early years. The …Difficulty 1/5
- 27.In an annuity contract, the period during which premium payments are made and funds accumulate is called the:Difficulty 1/5
- 28.An immediate annuity is distinguished from a deferred annuity primarily by:Difficulty 1/5
- 29.Which party bears the investment risk in a fixed annuity?Difficulty 1/5
- 30.The exclusion ratio used to determine the tax-free portion of each nonqualified annuity payment is calculat…Difficulty 2/5
- 31.An annuity payout option that guarantees income for life, but with payments continuing for a minimum number…Difficulty 1/5
- 32.What happens to annuity payments received after the annuitant has fully recovered the investment in the con…Difficulty 2/5
- 33.The key federal income tax advantage of a nonqualified deferred annuity during the accumulation phase is that:Difficulty 1/5
- 34.When the owner of a non-MEC nonqualified deferred annuity takes a partial withdrawal, the amount taxable as…Difficulty 2/5
- 35.Are premiums paid into a personal nonqualified annuity deductible from federal income tax?Difficulty 2/5
- 36.An annuity owner dies, and the contract's death benefit of $95,000 is paid to the beneficiary. The deceased…Difficulty 3/5
- 37.For an exchange of annuity contracts to be tax-free under IRC Section 1035, the transaction must be:Difficulty 2/5
- 38.If a life insurance policy becomes a modified endowment contract (MEC), withdrawals from the policy are:Difficulty 2/5
- 39.What triggers a life insurance policy to be classified as a modified endowment contract (MEC)?Difficulty 3/5
- 40.A guaranteed lifetime withdrawal benefit (GLWB) rider on an annuity guarantees the owner:Difficulty 2/5
- 41.What is the purpose of a long-term care (LTC) rider attached to an annuity contract?Difficulty 2/5
- 42.Which statement best describes the basic function of an annuity?Difficulty 1/5
- 43.In terms of the economic risks they address, how does an annuity differ from life insurance?Difficulty 1/5
- 44.In an annuity contract, if no beneficiary is named, or all named beneficiaries predecease the owner, the pr…Difficulty 2/5
- 45.Which of the following statements about the parties to an annuity contract is correct?Difficulty 2/5
- 46.A primary advantage of naming a beneficiary on an annuity contract rather than leaving the proceeds to the …Difficulty 1/5
- 47.A charitable gift annuity is an arrangement under which a donor:Difficulty 2/5
- 48.An employer may use annuities to fund a nonqualified deferred compensation arrangement primarily because th…Difficulty 2/5
- 49.Which statement accurately describes how annuities are commonly used by employers?Difficulty 2/5
- 50.In an equity-indexed annuity, which feature limits the maximum amount of index gain credited to the contrac…Difficulty 2/5