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Free Annuities Practice Questions

Vermont Life, Accident & Health exam — 35 practice questions.

Subtopics: Deferred annuity, Annuitization, Owner versus annuitant, Exclusion ratio, 1035 exchange, Tax-sheltered annuity, Principles, Immediate vs deferred, Products, Payment options, Uses, Taxation, Parties to an annuity, Flexible premium annuity, Cash refund option, Installment refund option, Period certain option, Annuity units, Separate account, Tax-deferred accumulation, Early withdrawal penalty, Death before annuitization, Qualified vs nonqualified, Structured settlement, Annuity exclusion ratio

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Sample questions & answers

1. A deferred annuity is distinguished by the fact that income payments:

Begin at a future date chosen by the owner

A deferred annuity delays the start of income payments to a future date, allowing the accumulation phase to grow funds.

2. Annuitization of an annuity contract refers to:

Converting the accumulated value into a stream of income payments

Annuitization converts the accumulated value into periodic income payments, the payout phase of the contract.

3. In an annuity, the owner is the person who:

Holds the contract rights and can make changes or withdrawals

The owner holds the contractual rights, including changing beneficiaries and making withdrawals; the annuitant is the measuring life.

4. An annuitant invested 100,000 dollars in an annuity expected to pay out 200,000 dollars in total. The exclusion ratio, the tax-free return of principal, is:

50 percent

The exclusion ratio is investment divided by expected return: 100,000 divided by 200,000 equals 50 percent of each payment as tax-free principal.

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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.