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Free Annuities Practice Questions

Wyoming Life, Accident & Health exam — 36 practice questions.

Subtopics: Purpose of annuities, Life-only income, Variable annuity risk, Exclusion ratio, Qualified annuity, Annuity free look, Death during accumulation, 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, Annuitization, Death before annuitization, Qualified vs nonqualified, Structured settlement, Annuity exclusion ratio

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Sample questions & answers

1. An annuity is fundamentally designed to:

Provide income that the annuitant cannot outlive

An annuity systematically liquidates a sum into income, addressing the risk of outliving one's assets.

2. For a given premium, the payout option that generally provides the highest periodic income is:

Straight life (life-only)

The straight life option usually pays the highest income because payments stop at death with no guarantee to a beneficiary.

3. During the accumulation phase of a variable annuity, the investment risk is generally borne by:

The contract owner

In a variable annuity the owner bears the investment risk because values depend on the chosen subaccounts.

4. The portion of each annuity income payment that represents a tax-free return of the owner's principal is determined by the:

Exclusion ratio

The exclusion ratio determines how much of each annuity payment is a nontaxable return of the owner's cost basis.

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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.