Chapter 5 Know This

What is the required entity for an annuitant, considering that annuities are based on life expectancy?

A natural person

What is the term for the phase when funds are being deposited into an annuity?

The accumulation period

What is the term for the phase when an annuitant begins receiving payments from the annuity?

The annuity period

What is the relationship between a shorter life expectancy and the benefit amount in an annuity?

It leads to a higher benefit

What is the relationship between a longer life expectancy and the benefit amount in an annuity?

It leads to a lower benefit

How are annuity premiums invested in a fixed annuity?

They are deposited into the company's general account

What type of annuity is bought with a single premium and starts paying out almost immediately?

An immediate annuity

When do income payments commence for a deferred annuity?

Sometime after one year from the purchase date

Which annuity payout option offers the highest monthly payment but carries the risk of not paying out the entire principal?

Pure life annuity

Which payout option ensures payments continue for a specified duration, irrespective of whether the annuitant is alive?

The fixed-period option

What is the primary purpose or main use for annuities?

To provide retirement incom