Unit 9: Annuities Checkpoint Exam
Questions and Actual Answers.
Which of the following is designed to protect a person from running out of money from "living
too long"?
A) Permanent insurance
B) Death benefits
C) Annuities
D) Term insurance - Answer C) Annuities
Explanation: Annuities were designed to provide a steady cash flow for an individual during her
retirement years and to alleviate fears of outliving one's assets; it is referred to as longevity risk.
Which of the following annuity payout options pays the highest monthly income?
A) Life with refund option
B) Life-only option
C) Joint life option
D) Life with period certain option - Answer B) Life-only option
Explanation: The life-only option pays the highest monthly income because there are no other
contingencies, and only the annuitant's life expectancy was considered to determine the
amount of the payout.
Which of the following annuities requires that the producer have a securities license?
A) Market value-adjusted annuities
B) Equity-indexed annuities
C) Variable annuities
D) Fixed annuities - Answer C) Variable annuities
Explanation: If a producer wishes to offer variable annuities, he must be licensed by the state
and have a securities license. (SEC & FINRA)
All of the following statements about the annuitization period are correct EXCEPT
A) when the annuitization period starts, additional premium payments can be made
B) when the annuitization period starts, the owner can't change the contract
C) when the annuitization period starts, the annuity cannot be surrendered
Questions and Actual Answers.
Which of the following is designed to protect a person from running out of money from "living
too long"?
A) Permanent insurance
B) Death benefits
C) Annuities
D) Term insurance - Answer C) Annuities
Explanation: Annuities were designed to provide a steady cash flow for an individual during her
retirement years and to alleviate fears of outliving one's assets; it is referred to as longevity risk.
Which of the following annuity payout options pays the highest monthly income?
A) Life with refund option
B) Life-only option
C) Joint life option
D) Life with period certain option - Answer B) Life-only option
Explanation: The life-only option pays the highest monthly income because there are no other
contingencies, and only the annuitant's life expectancy was considered to determine the
amount of the payout.
Which of the following annuities requires that the producer have a securities license?
A) Market value-adjusted annuities
B) Equity-indexed annuities
C) Variable annuities
D) Fixed annuities - Answer C) Variable annuities
Explanation: If a producer wishes to offer variable annuities, he must be licensed by the state
and have a securities license. (SEC & FINRA)
All of the following statements about the annuitization period are correct EXCEPT
A) when the annuitization period starts, additional premium payments can be made
B) when the annuitization period starts, the owner can't change the contract
C) when the annuitization period starts, the annuity cannot be surrendered
