Question

true or false?

1. All annuity contracts have a feature that protects the annuitant from inflation.

2. Variable annuities are a riskier investment than fixed annuities.

3. The goal of most annuities is to provide a steady stream of income during retirement for a specified period of time or for the remainder of one or more lives.

4. Immediate annuity contracts will only pay the annuitant. There are no exceptions. This means that upon the annuitant’s death the contract is terminated and the insurance company that issued the annuity has no more obligations.

5. One feature that all annuity contracts have in common is that the annuitant can never outline the annuity payments.

6. If you are concerned with the risk of outliving your financial resources, then you might consider purchasing an immediate annuity at least in an amount sufficient to cover your basic living expenses.

Answer 1

2. TRUE, because fixed annuities offer guaranteed minimum rate of interest when comapared to variable annuities .But there is less flexibility and growth opportunities in Fixed annuities .

3. True , The goal of annuity is to provide a a fixed stream of income to the annuitant or their remainders in case of retirement or death in order to secure the investor against superannuation.

4.False , there are special options in case of immediate annuity with special options :

You wish to guarantee lifetime income for both yourself and a spouse ("Joint and Survivor" annuity)

You want payments to continue for a specified period (e.g. 5 or 10 years or more) to a designated beneficiary ("Certain and Continuous" annuity)

You want to ensure that should you die before your initial principal has been distributed, an amount equal to the balance of the deposit continues to a named beneficiary ("Refund" annuity).

5. False, the annuitant can choose the stream of payments based on how long the payments should last .Also they can decide to recieve a fixed payment or payments based on the performance of the mutual funds.And the time of receiving the payment is based on what is specified in the annuity contract. But once decide the stream of payments cannot be changed. Thus an annuitant can outline the stream of payments.