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Free Annuities Practice Questions

North Carolina Life exam — 51 practice questions.

Subtopics: Purpose, Accumulation phase, Immediate annuity, Fixed vs variable, Life only payout, Suitability, Accumulation period, Annuitant, Deferred annuity, Fixed annuity, Variable annuity, Variable annuity licensing, Equity indexed annuity, Pure life option, Life with period certain, Refund annuity, Joint and survivor, Annuity certain, Tax-deferred growth, Exclusion ratio, Surrender charge, Retirement income use, Structured settlement, Owner rights, Early withdrawal penalty, Annuity vs life insurance, Single vs flexible premium annuity, Annuity surrender charge period, Bailout provision, Market value adjustment, Annuitization vs surrender, Annuity death benefit, Free withdrawal provision, Cash refund vs installment refund, Joint life annuity, 1035 exchange, Qualified annuity funding, Accumulation vs annuity units, Assumed interest rate, Guaranteed minimum income benefit, Guaranteed minimum withdrawal benefit, Qualified longevity annuity contract, Split-annuity concept, Annuity suitability standard, Nonqualified withdrawal taxation, Owner's death before annuitization, Two-tier annuity, Annuity guaranteed minimum value, Annuity exclusion ratio

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Sample questions & answers

1. The primary purpose of an annuity is to:

Provide income, often for retirement

An annuity is designed to liquidate a sum of money into a stream of income, commonly to provide for retirement, and protects against outliving one's assets.

2. During the accumulation phase of a deferred annuity:

Funds are paid in and grow tax-deferred

During the accumulation (pay-in) phase, contributions grow on a tax-deferred basis; the payout (annuitization) phase begins when income payments start.

3. A single premium immediate annuity (SPIA) begins making income payments:

Within about one payment interval after purchase

An immediate annuity is funded with a single premium and starts income payments within one payment period (such as one month or year), unlike a deferred annuity.

4. A variable annuity differs from a fixed annuity primarily because:

The owner bears investment risk in separate accounts

In a variable annuity, values are held in separate-account subaccounts and the contract owner bears the investment risk; selling them requires a securities registration.

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Practice: Annuities

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.